JSW Steel is in talks with Welspun Corporation to acquire the latter’s 100 per cent stake in sponge iron maker Welspun Maxsteel for over Rs.1,000 crore. Welspun Maxsteel has its manufacturing unit in Raigad, Maharashtra close to JSW Ispat’s steel plant at Dolvi.
The JSW unit has been sourcing sponge iron from Welspun Maxsteel to make superior steel. The prime objective of acquiring the company is to reduce raw material cost. JSW Steel declined to comment. But according to people familiar with the development, the deal is in the making.
Total debtWelspun Corporation holds 99.85 stake in Welspun Maxsteel that has debt of Rs.1,030 crore, which will be taken over by JSW Steel. As part of the deal, JSW Steel will also take over a jetty.
Welspun Maxsteel was formed in May, 2009, after Welspun Steel completed the acquisition of Vikram Ispat, the sponge iron division of Grasim Industries.
The facility, spread across 435 acres, was set up in 1989.
JSW Steel had in 2010 acquired controlling stake in Ispat Industries for Rs.2,157 crore from the Mittals, and changed its name of JSW Ispat Steel. Recently, the company, controlled by billionaire Sajjan Jindal, had announced plans to invest $22 billion to expand its capacity in ten years.
