Jsw Steel Case Study

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REPORT ON
JSW STEEL – JSW ISPAT MERGER 2012

Submitted By:
Abhinav Sharma: 2013C01
Abhishek Sareen: 2013B02
Aditya Goel: 2013C02
Sonam Sinha: 2013C54

STRATEGIC RATIONALE FOR THE DEAL
The merger will help the amalgamated entity in term of increasing capacity, Risk diversification, and better reach to markets, tax benefits & ability to reduce financing costs. Merger will bring tax benefit of Rs 300 crore. Synergy in operations will come around 350crore while the borrowing cost of JSW ISPAT will reduce by Rs 250 crore.

In below table we have described the different parameters in which JSW steel & JSW ISPAT will gain from their complementary strength

JSW STEEL JSW ISPAT COMBINATION
Capacity
• 11 MTPA
• 3.3 MTPA Scale- JSW Steel has become the second largest steel producer in India.

Location

• In the Iron Ore rich belt
• Freight advantage on Sales in southern India

• Shore based
• Logistically better placed for sea borne imports
• Freight advantage on sales in western/ central India • Diversifying risk by having multiple sources of raw material
• Easy access to import and steel exports
• Increased brown field expansion capability due to JSW ISPAT
• PAN India presence
• Using each other’s marketing and distribution network

Technology

• BF – BOF
• Corex – BOF

• DRI / BF – Conarc
• Flexible production processes
• Gaining capability to modern steel making technologies under a single entity
• Diverse Product range

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