JSL-JSHL merger process achieves a major milestone; Stocks trade higher

2 Mar 2022 , 02:14 PM

National Company Law Tribunal (NCLT), Chandigarh Bench, while hearing the first motion petition on February 25, 2022, pronounced the detailed order for convening the meetings of the shareholders and creditors of Jindal Stainless Limited and Jindal Stainless (Hisar) Limited for approving the Scheme of a merger between both the companies.

The first motion petition was filed with NCLT in March 2021; the Board of JSL and group companies had approved the merger scheme in December 2020.

At around 2.15 pm, Jindal Stainless Ltd was trading at Rs194.65 per share up by Rs0.65 or 0.34% from its previous closing of Rs194 per share on the BSE. Jindal Stainless (Hisar) Ltd was trading at Rs363.25 per piece up by Rs10.2 or 2.89% from its previous closing of Rs353.05 per piece on the BSE.

MD, Jindal Stainless, Abhyuday Jindal said, “We’ve been waiting in anticipation for this order by NCLT. Work is in full swing to complete the procedural requirements within the stipulated timeline. With our expansion underway, the merged company’s capacity will be 2.9 million tons per annum by FY23, taking us to the league of top few stainless steel producing companies in the world.”

The merger will be effective from the appointed date of April 1, 2020. Considering the present NCLT order, the Company expects the completion of the merger in H1FY23. The standalone proforma revenue of the merged entity for Q3FY22 and 9MFY22 stand at Rs8,880 crore and Rs22,896 crore respectively. The corresponding EBITDA numbers are Rs1,261 crore and Rs3,444 crore.

The company said in a filing that merger of JSHL in JSL will create a mega stainless steel conglomerate, which will propel Jindal Stainless among the top 10 global stainless steel producers even on its current capacity level. The merged entity will have diversified end-to-end product portfolio of over 120+ stainless steel grades with a 360-degree reach to customers from all segments.

While JSL has largely been focused on high volume stainless steel offerings and has been actively catering to sectors like railway, architecture, automobiles and infrastructure, JSHL is focused on high-margin specialized product division and has been actively catering to value-added segments viz precision strips, razor blade and coin blanks and other niche offerings.

JSL’s port and raw material proximity coupled with JSHL’s strategically located facility in key domestic consumption centres will harness better operational synergies. Besides, a single entity will have a simplified capital structure, stronger balance sheet and leverage ratios, will improve financial flexibility, and unlock value for all the stakeholders.