Sajjan Jindal, Chairman and Managing Director, JSW Steel

“The merger completes the integration and aims to capture full value of the combination.”

September 14, 2012 10:58 IST | India Infoline News Service

Sajjan Jindal, Chairman and Managing Director, JSW Steel is a Mechanical Engineer from Bangalore University, Mr Jindal began his career in 1984 in Mumbai by independently looking after the O.P. Jindal Group's steel manufacturing business in western India. Since then he has followed an aggressive strategy that has propelled JSW Steel to one of India's largest private integrated steel-makers. In 2009, Jindal was awarded the prestigious 19th Willy Korf / Ken Iverson Steel Vision Award at the Steel Survival Strategies XXIV Conference for elevating JSW Steel amongst the selected few global steel producers. Earlier in 2007, he was named the 'Ernst & Young Entrepreneur of The Year' in the 'Manufacturing Category'.

JSW Steel Ltd. is a part of the diversified $10 bn JSW Group, which has presence in Steel, Energy, Infrastructure, Cement, Aluminium and IT segments. Currently, JSW Steel is the 2nd largest integrated steel company in India with an installed steel making capacity of 11 MTPA. It is the only steel company with strategic presence in both Southern and Western regions of India, operating through four manufacturing facilities. JSW Steel’s plant at Vijaynagar is one the largest single location steel producing facility in the country with a capacity of 10 MTPA. JSW Steel boasts of a strong product assortment covering the entire gambit of flat and long steel products manufactured through upscale technology in the form of Corex and Blast furnaces. JSW Steel also has an operating strategic partnership with Japan based JFE Corporation to share technological competence and gain access to the automotive steel making technology. The company has international presence in Chile, US and Mozambique for its Iron ore, coking coal and plate / pipe mill operations.

Yash Ved of IIFL gives you highlights from a media interaction where SAJJAN JINDAL says “The merger completes the integration and aims to capture full value of the combination.”

Brief us about the JSW Steel-JSW Ispat merger?

The Boards of Directors of JSW Steel and JSW Ispat, in their respective meetings approved the merger proposal.

The exchange ratio recommended by the Valuers and approved by both the boards is 1 (one) equity share of JSW Steel to be issued for every 72 [seventy two] equity shares of JSW Ispat.

Merger of JSW Ispat with JSW Steel is an important step in our ongoing growth journey towards creating a world class global steel company. JSW Ispat brings several unique advantages and the merger will help in realization of integration benefits of the two companies.

What are the benefits of the merger?

The integration of JSW Ispat into JSW Steel is expected to bring significant strategic advantages with it, particularly alternative steel making technologies, ability to achieve swift capacity expansion, shore based facility and pan-India expansion of market reach. The merger completes the integration and aims to capture full value of the combination.

Under the terms of the proposed Scheme of merger, equity shareholders of JSW Ispat will receive 1 (One) equity share in JSW Steel of face value of Rs 10 each for every 72 [seventy two] equity shares in JSW Ispat held by them.

JSW Steel’s shareholding in JSW Ispat will stand cancelled under the Scheme.

JSW Steel will issue 1.86 crore new equity shares, thereby increasing its outstanding shares to 24.17 crore and its equity capital to Rs. 241.72 crore. JSW Steel will also issue 48.54 crore new 0.01% non convertible cumulative redeemable preference shares to the preference shareholders of JSW Ispat increasing its preference share capital to Rs. 764.44 crore.

What will be the promoters holding post the merger?

In the post merger equity share capital, the promoters of JSW Steel will own 35.1% in the merged entity, 14.9% shall be held by JFE Steel International Europe BV (herein referred to as “JFE Holdings”) and the remaining 49.96% will be held by the public shareholders.

When do you expect JSW Steel-Ispat to complete the merger?

JSW Steel expects to complete the process of merger by the end of this financial year.

JSW Ispat will start posting profit from FY14.

What are your expansion plans?

The steel production capacity of the combined entity would be 14.3 million tons and would be further enhanced to 40 MT by 2020.

Comment on your capex plans?

The combined entity will be investing Rs 12,000 crore on expansion in the next two years.

What is your current debt?

The net debt level of the merged entity will be Rs 25,200 crore with a debt to equity ratio of 1:1.15.

What is your outlook on global steel industry?

The global steel industry continues to be bad in respect to raw material prices and margins are also down.

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