A subsidiary of JSW Steel is set to raise Rs 26 billion through a three-year zero-coupon bond to partially fund its Rs 39 billion acquisition of Thyssenkrupp Electrical Steel India, a division of Germany’s Thyssenkrupp Group. The financing plan includes Rs 26 billion in debt and Rs 13 billion in equity.
Fundraising and Bond Details
The bond issuance is scheduled for January 24, carrying an implied yield of 9.45%. The funds will be raised under Jsquare Electrical Steel Nashik (JESPL), a newly established entity created in September 2024 as a subsidiary of JSW JFE Electrical Steel. This joint venture between JSW Steel and JFE Steel, Japan’s second-largest steel producer, aims to strengthen its position in the electrical steel market.
Equity Infusion and Financial Backing
Both JSW Steel and JFE Steel will inject Rs 13 billion in equity into Jsquare and provide a board-backed letter of comfort to ensure the company’s ability to meet financial obligations under the bond issuance.
Strategic Acquisition and Rebranding
Established just four months ago, Jsquare currently lacks its own operations. However, following the acquisition, the joint venture plans to rebrand Thyssenkrupp Electrical Steel India to reflect the JSW and JFE brands.
Exclusive Manufacturing Rights and Market Impact
This acquisition grants JSW Steel an exclusive license from Thyssenkrupp to manufacture cold-rolled grain-oriented (CRGO) electrical steel in India—a product produced by only a few steelmakers worldwide. Jsquare is expected to benefit from strong managerial, financial, and operational support from both joint venture partners.
Industry Position and Future Outlook
JSW Steel boasts a production capacity of 35.7 million tonnes per annum (MTPA), including 1.5 MTPA in the US. JFE Steel, a globally recognized steel manufacturer, has maintained a long-standing partnership with JSW Steel, reinforcing their commitment to expanding in the electrical steel sector.
Care Ratings has assigned a stable AA- rating to the proposed non-convertible debentures (NCDs), highlighting the robust financial backing and strategic importance of the acquisition.