JSW Steel Acquires Remaining 50% Stake of NSL Green Steel Recycling

JSW Steel, a prominent player in the steel industry, jumped nearly 1% in early trade on September 28. This surge came after the successful acquisition of a substantial stake in NSL Green Steel Recycling. JSW Steel has purchased the entire 50% stake that was previously held by National Steel Holding (NSHL) in NSL Green Steel Recycling (NSL). This acquisition was officially completed on September 27, as per the BSE filing

A Journey Towards Sustainability

The journey of this acquisition began with a joint venture agreement (JVA) inked between JSW Steel and NSHL on August 18, 2022. The primary goal of this joint venture was to establish cutting-edge scrap shredding facilities in India, promoting the increased utilization of steel scrap in steelmaking operations to lower carbon emissions.

Earlier, the equity shares and compulsorily convertible debentures of the joint venture company, NSL Green Steel Recycling Ltd, were equally divided, with both JSW Steel and NSHL holding a 50% stake. After NSHL's decision to exit the joint venture, JSW Steel's board of directors gave the green light to the acquisition of NSHL's entire stake in the joint venture company.

JSW Steel's strategic vision for reducing its carbon footprint and maximizing the use of steel scrap in its steel-making operations. The collaboration with NSHL aimed to establish a scrap shredder facility in Khalapur, Maharashtra, which would supply scrap to JSW Steel's plants in the form of baled or bundled materials.

Financial Performance

In the April-June quarter, JSW Steel reported 10.83% year-on-year increase in revenue from operations at ₹42,213 crore. Net profit for the same quarter showcased remarkable growth, surging by 189.39% at ₹2,428 crore. Moreover, the company's operating profit margins expanded by 600 basis points on a yearly basis, climbing to a noteworthy 17%.

The stock of JSW Steel has delivered a remarkable return of 13.18% over the last six months, contrasting with the benchmark Nifty50 index, which achieved a return of 16.31% over the same period

Previous Deal

JSW Group Chairman Sajjan Jindal's private company is planning to acquire a stake of approximately 45-48% in MG Motor India, a subsidiary of SAIC Motor. JSW Steel and JSW Energy are not involved in this deal. Jindal would own 45-48%, while dealers and Indian employees would hold 5-8%, and SAIC would retain the remaining shares. The Indian government has approved this plan. The crucial point here is that more than 51% of the company's ownership will be in Indian hands, making the Chinese company SAIC a minority partner with a maximum of 49%.

A government official mentioned that this move would effectively transform the company into an Indian entity rather than a Chinese one. There's also talk of a possible listing of the company on the Indian stock market in the coming years. The Indian management and board would play a more prominent role in decision-making.

This aligns with the company's goal of creating a high-quality car in India, similar to Tesla, for both the Indian and global markets. MG Motor currently offers several car models in India, and the company's estimated value is around $1.2-1.5 billion.