JSW Steel Chairman Sajjan Jindal expects a lot of synergy in operation and economies of scale from the merger of JSW Ispat with itself.
The company could implement brown-field expansion at Vijayanagar in Karnataka and Dolvi in Maharashtra, Jindal said.
With this merger, JSW Ispat may witness a fall in the cost of borrowing and the merged entity may get Rs 250 crore benefit from it. The net debt level of the merged entity would be around Rs 25,200 crore with a debt to equity ratio of 1:1.15.
On January 30, shareholders of JSW Ispat would meet to approve company’s proposed merger with JSW Steel, which was announced in September last year.
Post-merger, promoters of JSW Steel will hold 35.12 per cent in the merged entity, while company’s second largest shareholder JFE Steel holding will come down to 14.92 per cent. JFE had 15 per cent stake in JSW Steel till the time of merger announcement.
In December 2010, JSW Steel bought 41 per cent stake in the debt-ridden Ispat Industries from Pramod and Vinod Mittal, brothers of the steel czar LN Mittal, for about Rs 2,157 crore. Ispat Industries was subsequently named as JSW Ispat.
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