JSW Steel Ltd is acquiring the Indian electrical steel business of Thyssenkrupp AG in partnership with JFE Steel Corporation of Japan for ₹4,051.4 crore, strengthening its presence in the speciality steel business.
The acquisition is being done via a special purpose vehicle Jsquare Electrical Steel Nashik Private Limited, which is a wholly owned subsidiary of JSW JFE Electrical Steel Private Ltd (J2ES). JFE, which holds a 15 per cent stake in JSW Steel Ltd, is an equal partner in J2ES which was formed earlier this year.
Thyssenkrupp Electrical Steel India Private Ltd (tkES), a wholly owned subsidiary of Germany’s Thyssenkrupp AG, is India’s only manufacturer of top grade grain oriented electrical steel (GOES), which is used in electrical transformers and high performance generators, with its facility located in Nashik, Maharashtra.The German major said the sale is taking place for “market strategic reasons”.
The deal includes licensing/transfer of associated technology packages by the German entity which is one of the top global diversified groups. The Indian entity posted a turnover of ₹1,271 crore in FY24.
JSW Steel said the acquisition is in line with the company’s strategy of enhancing its proportion of value-added steel products. The transaction is subject to the approval of the CCI.
Jayant Acharya, joint managing director & CEO, JSW Steel, said, “The market for grain oriented electrical steel is growing. The acquisition will enable the consortium of JSW and JFE to manufacture this product in India and supply it to customers in India and globally, thereby also enabling import substitution.”
While the acquisition is expected to be completed within eight months, J2ES is also in the process of setting up a greenfield plant in Karnataka to manufacture GOES with a planned investment of ₹5,500 crore. The unit is expected to commence full production in 2027. Now, through the acquisition, JSW and JFE shall achieve instant market access and can promptly establish an integrated system from manufacturing to sales of GOES in India, JSW said in a statement.
The Nashik plant of tkES was initially set up by Raymond Steel in 1995 to manufacture electrical and carbon steel. Thyssenkrupp picked up a 76 per cent stake in 2000 and the rest in 2004, making it a wholly owned subsidiary of the German parent. tkES expanded capacity in 2018. The company currently employs around 500 people in India.
In a statement, Thyssenkrupp AG has explained its decision. “The supply of raw materials from Thyssenkrupp’s German steelworks to India is cost-intensive and weakens our competitiveness in India in the long term,” Dennis Grimm, spokesman of the executive board of Thyssenkrupp Steel, said.
“Setting up our own local raw material production is not economically feasible for us...we will not be able to achieve the same economies of scale by supplying from Germany. This is why the sale is the right step for us at the right time,” he added.
