JSW Steel closed one of the biggest deals in Indian Steel sector and is to acquire Welspun Maxsteel at INR 10 billion. The latter also has vacant land of approx 480 acres, available for future expansions.
JSW has entered into a definitive agreement with Welspun Enterprises, pursuant to which JSW shall acquire the entire equity shares held by Welspun Enterprises in Welspun Maxsteel for an enterprise value of INR 10 billion plus net current assets as of an agreed date of 31 Aug, 2014 subject to the relevant regulatory approvals and customary closing conditions.
JSW will be using about half of Welspun’s DRI at Dolvi (Maharashtra) Steel plant and the entire quantity will be consumed after completion of its targeted expansion plan of 5 MnT.
JSW will be supplying extra Pellets from its subsidiary Amba River Coke to Welspun’s DRI plant, which will ultimately reduce costing of the latter as buying from outside sources will reduce.
Owing to low availability of natural gas from contracted suppliers, Welspun was unable to utilize its Raigarh (Maharashtra) based 0.9 MnT pa gas based DRI plant at maximum capacity. It also has a captive jetty and railway siding.
JSW Steel is India’s largest steel producer in terms of installed capacity of 14.3 MnT pa. Welspun DRI plant is located in Salav village in Raigad district of Maharashtra. Captive jetty has an existing capacity of 2.5 MnT pa which is located at 1.8 km from the plant, while the captive railway siding is located at Roha junction on National Konkan Railway, 35 km from the DRI plant.
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