JSW Steel and JFE Steel Join Forces to Buy Thyssenkrupp’s Steel Unit in ₹4,051 Crore Deal

JSW Steel from India and JFE Steel from Japan are teaming up to buy the specialty steel unit of the German company thyssenkrupp located in Nashik for ₹4,051 crore. This joint venture will be equally owned by both companies, and the deal will involve an all-cash payment. It is expected to finalize within eight months, pending regulatory approvals.

Thyssenkrupp’s electrical steel division in India is one of the first manufacturers of this type of steel and reported revenues of ₹1,271 crore for the 2023-24 financial year. Electrical steel, which is made from a mix of iron and silicon, is crucial for making efficient electric transformers, generators, and motors.

The newly formed joint venture, named JSW JFE Electrical Steel Pvt. Ltd., was established in February to produce electrical steel in India. JSW and JFE plan to invest ₹5,500 crore to set up a manufacturing plant in Karnataka, expected to start production by FY27. This acquisition will allow the joint venture to quickly enter the electrical steel market.

Jayant Acharya, joint managing director and CEO of JSW Steel, stated that the market for grain-oriented electrical steel (GOES) is growing rapidly. This acquisition will enable the joint venture to manufacture GOES in India, supply it to local and global customers, and support the Indian government’s goal of becoming self-reliant by reducing imports.

Koushik Bhattacharyya, managing director at Avendus Capital, emphasized that thyssenkrupp has developed strong technology for producing high-quality GOES in India, which is essential for India’s transition to green energy.

Currently, India relies mostly on imports for electrical steel, with only a small amount produced domestically. To address this, the Indian government has included electrical steel in its ₹6,322 crore production-linked incentive (PLI) scheme, which encourages local manufacturing. The PLI scheme offers a 12% incentive to electrical steel manufacturers who use domestically produced basic steel.

Thyssenkrupp has been in discussions with the Indian government to expand its production capacity, as it faces challenges due to the lack of protective measures for electrical steel producers in India.

After the announcement, shares of JSW Steel rose by 1.25% to ₹992.4 on the Bombay Stock Exchange, while the Sensex index closed 0.27% higher.