JSW Steel, India’s leading integrated steel producer with a capacity of 14.3 MnT pa, is in talks to acquire Welspun unit for about INR 10 billion.
India’s 3rd largest Steelmaker JSW is in talks to acquire Welspun Maxsteel for about INR 10 billion. The main objectives for this deal are to cut production costs, source cheaper raw material and strengthen its presence in western & northern markets.
It is in the news, both companies are in talk with each other for a deal and it is likely to cost around INR 10 billion. However, Mr. BK Goenka, Chairman of Welspun denies of any recent talks on the matter and mentions that they have been talking to them in past.
JSW, having a 3 MnT steel plant at Dolvi (Raigad, Maharashtra), purchases Sponge iron from Welspun Maxsteel plant. The acquisition will assist the company on a continuous supply of cheaper raw material as it is planning to expand its Dolvi plant capacity to 5 MnT.
After a series of embargoes on Iron ore mining in Karnataka, production of JSW at its 10 MnT primary plant at Vijayanagar (Karnataka) has been hit by Iron ore shortage. The group has been expanding its installed capacity at Dolvi plant to supply in western & northern markets. To cut down the production costs, the company heavily invested to complete its Pellet, Coke oven & captive power plants.
Leader (metals) at global consultant Anjani Agarwal stated in the news that 3 reasons – acceleration in infrastructure spending, lower interest rates to trigger demand for automobiles & consumer durables and mines opening to drive up heavy equipment sales are boosting the steel demand. In next decade, it is expected that steel demand will rise up to 5%, he further added.
Welspun Group, the multinational company owned by BK Goenka, purchased the Vikram Ispat plant in May, 2009 from Aditya Birla Group and renamed it Welspun Maxsteel. It later raised the plant’s capacity to 1 MnT.