JSW Steel said its shareholders have approved
merger of JSW Ispat Steel with itself, paving the way for the company
to become second largest steel producer in the country.
The Sajjan Jindal-led company said that 99.99 % shareholders
voted in favour of merging JSW Ispat with the company in the meeting, held recently.
Now, a formal nod of the Bombay High Court is
required to complete the merger process. Post merger, JSW Steel will have an
annual production capacity of 14.3 million tons and become second largest domestic
producer after SAIL.
Also, JSW Ispat will transfer its Kalmeshwar undertaking and
JSW Steel will transfer its downstream undertaking to JSW Steel Coated
Products. Further, JSW Building Systems will also be merged with JSW
Steel.
Announcing the merger in September, JSW Steel chairman Sajjan
Jindal had said that “this merger will give us a lot of synergy in
operation and economies of scale. We can now go for brown-field expansion at
Vijayanagar in Karnataka and Dolvi in Maharashtra.”
Besides, it will also reduce the cost of borrowing for JSW
Ispat and the merged entity is likely to get Rs 250 crore benefit from it. Net
debt level of the merged entity would be around Rs 25,200 crore with a debt to
equity ratio of 1:1.15.
Post-merger, promoters of JSW Steel will hold 35.12 %
in the merged entity, while company's second largest shareholder JFE Steel holding
will come down to 14.92 %. JFE had 15 % stake in JSW Steel till
the time of merger announcement.
The trigger for the merger was JSW Ispat clocking a net
profit of Rs 478.24 crore during the April-June quarter of 2012, which was its
first one in last few years.
Sourced
Leave a Reply