JSW plans Rs 5,000 crore rights issue to buy Bhushan Power

Mumbai: Sajjan Jindal’s JSW Steel plans to raise up to Rs 5,000 crore through a rights issue, so as to tie the funding in place to acquire bankrupt Bhushan Power and Steel.

At a press conference that the company held today to announce its second quarter results, MVS Seshagiri Rao, joint MD and group CFO, said the board had also approved the fundraising plan.

“The company is in the midst of implementing and pursuing multiple organic and inorganic growth opportunities,” Rao said. “With the objective of further strengthening the balance sheet, the board of directors has accorded in-principle approval for a rights issue of up to Rs 5,000 crore.”

JSW Steel has submitted a bid of Rs 19,700 crore for the Bhushan Power and Steel asset, which is the highest of the three submitted. Mint had reported on October 18 that lenders to the bankrupt asset were overwhelming in their support for JSW Steel’s bid, though these details are not public yet.

Separately, JSW has also indicated that if it were to win the asset, it would bring in a financial partner to fund the acquisition. Even so, it will need to bring substantial equity of its own, and hence the need to raise funds through the rights issue.

A decision by the NCLAT on the status of this case is awaited.

JSW Steel, one of the two large private sector steel makers in India, reported consolidated net profit of Rs 2,087 crore in the second quarter, up 150% from the previous year’s Rs 836 crore, driven by higher volumes.

Crude steel production was 4.18 million tonnes (mt) for the quarter, up 6% year on year. Revenue from operations rose 25%, year on year, to Rs 21,552 crore while operating EBITDA was Rs 4,096 crore, up 62%.

In order to simplify the corporate structure, the board of directors of JSW Steel also approved a scheme of amalgamation that would merge four wholly owned subsidiaries — Dolvi Minerals and Metals, Dolvi Coke Projects, JSW Steel Processing Centres and JSW Steel (Salav) — with JSW Ltd.

JSW Steel closed up 0.40% at Rs 353.45 on the BSE on Thursday.

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