JSW Ispat Special Products Ltd, formerly known as Monnet Ispat & Energy Ltd, has proposed to spin off its sponge iron making facility in Raipur to a wholly owned subsidiary.

The company says the transfer of the unit and the assets associated with it (specified undertaking) will be done on a going concern basis by way of a slump sale through a scheme of arrangement, subject to shareholders’ and other regulatory approvals.

The wholly owned subsidiary, Mivaan Steels Ltd, will pay Rs 443.11 crore in cash, debt and other securities for the assets to JSW Ispat.

JSW Ispat says the transaction is expected to create and enhance value for stakeholders by unlocking the intrinsic qualities of both the businesses.

The manufacturing facilities at Raipur comprise a sponge iron manufacturing plant with a capacity of 0.3 million tonnes (mt), ferro alloy plant and steel manufacturing plant with a capacity of 0.25mt.

The assets to be transferred will also include mining facilities at Kanker and associated coal washery operations at Patherdih and certain other assets and properties.

Following the transfer of the Raipur business, which has been a drag on the company’s performance over the years, JSW Ispat Steel plans to focus on the other unit of erstwhile Monnet — the Raigarh plant.

The products made at the manufacturing facilities at Raipur pertain to the commodity grade market that caters to the structural and construction sectors with comparatively lower volumes and serves customers predominantly around its operating area.

The focus of the other facility at Raigarh is on special steel products with comparatively higher volume of production, serving customers in the exports and domestic markets.

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.

“Accordingly, with a view to inter-alia achieve dedicated management focus on their respective grades of products and customer segments, facilitate strategic opportunities (including fund raising prospects), maximise value, increase efficiencies and enhance administrative control, the company proposes to transfer the specified undertaking to the transferee company,” JSW Ispat informed shareholders.

Industry sources said the move could be a precursor of eventual sale of the Raipur unit, pointing that company’s focus is on unlocking value for shareholders.

JSW, in partnership with private equity firm AION, had acquired Monnet Ispat, through corporate insolvency resolution process in 2018.