JSW Ispat To Sell Raipur Plant, Related Assets To Subsidiary For Rs 450 Crore

JSW Ispat Special Products Ltd. will sell its Raipur, Chhattisgarh plant and certain assets to a fully owned subsidiary and instead focus on specialty steel used in automobiles to smartphones.

In the two-step deal, the joint venture between JSW Steel Ltd. and private equity firm AION proposes to first fully acquire Mivaan Steels Ltd. for Rs 80,000, according to an exchange filing.

The firm was set up in November 2021 to mine and manufacture metals and steel but is yet to commence operations. The transaction will be closed within 30 days and requires no regulatory approvals, the filing said.

JSW Ispat (erstwhile Monnet Ispat & Energy Ltd.) will then transfer the Raipur units and associated assets via slump sale as a going concern to Mivaan Steels for Rs 450 crore.

The sale price for the related-party transaction was determined based on an independent valuation report from PWC Business Consulting Services LLPs, the filing said. The deal, being done at an arm’s length, is subject to shareholder, creditor and regulatory approvals.

The transaction covers the manufacturing units at Raipur and mining facilities at Kanker and associated coal washery operations at Patherdih, besides some other assets and properties. The Raipur site comprises a sponge iron plant with a capacity of 0.3 million tonnes per annum, and a ferro alloy plant and steel manufacturing plant with a capacity of 0.25 MTPA.

Why The Deal

JSW Ispat has manufacturing facilities at Raigarh and Raipur.

According to the company's filing, the Raipur units cater to the commodity grade market for structural and construction sectors with comparatively lower volume of production, and serve customers around its operating area.

The Raigarh facility, however, focuses on special steel products with a higher volume of production, serving customers in northern, eastern and western India, and overseas.

“With the transfer of the specified undertaking, the company will be able to focus on special steel products and explore and develop markets for its special steel products,” the filing said.

The deal will also help JSW Ispat facilitate strategic opportunities (including fundraising prospects), maximize value, increase efficiencies and enhance administrative control. Parent JSW Steel Ltd., in analyst calls earlier, had suggested that there was a plan to merging Monnet Ispat with itself.