In a deal that is expected to ease its stretched balance sheet while sustaining an expansion drive, billionaire Sajjan Jindal-led JSW Steel will transfer the steel assets of Bhushan Power & Steel Ltd (BPSL) into a new 50:50 joint venture with Japan’s JFE Steel Corp, a regulatory filing by JSW Steel announced on Wednesday.
The deal, anchored by JFE’s ₹15,750-crore commitment, is expected to nearly halve JSW Steel’s debt and ring-fence the BPSL assets under a clean JV structure. This will be the second joint venture between the two companies, the other being JSW JFE Electrical Steel.
In a complex transaction that is expected to be completed in the first half of FY27, JSW Steel will initially receive ₹24,283 crore in cash from a slump sale of BPSL’s steel assets to a subsidiary, JSW Sambalpur Steel Limited, Swayam Saurabh, the company’s chief financial officer, said during a media briefing on Wednesday. JFE will fund ₹7,875 crore of this transaction.
The remaining ₹16,608 crore will be raised as fresh debt by BPSL and JSW Sambalpur Steel, according to company executives who spoke on condition of anonymity.
Subsequently, JFE will pay ₹7,875 crore in a second tranche, which will again flow onto the books of JSW Steel. In total, after adjusting for expenses, JSW Steel will receive ₹32,250 crore for BPSL’s steel assets.
Another ₹5,000 crore of BPSL debt will be moved out of JSW’s consolidated books and into the joint venture structure, which will eventually hand India’s largest steel company by capacity ₹37,250 crore. This will help improve JSW Steel’s debt-to-Ebitda ratio by nearly 1x, Saurabh said. Ebitda stands for earnings before interest, tax, depreciation and amortization.
The money will be used to reduce its debt and aid its expansion, even while retaining BPSL’s Odisha-based 4.5 million-tonnes-per-annum (mtpa) steel plant in its fold.
JSW Steel’s total debt at the end of the July-September 2025 quarter stood at ₹79,153 crore, per data cited by the management during the post earnings call.
Mint reported last month that JSW Steel is in advanced talks with JFE for the JV, citing an executive aware of the development.
JSW Steel had acquired BPSL in 2021 from the bankruptcy court. The move came after the Supreme Court in September approved India’s largest steelmaker’s ₹19,700-crore plan to take over bankrupt Bhushan Power and Steel Ltd after creditors such as former promoter Sanjay Singal, Kalyani Group’s Torsteel, the state of Odisha, and other stakeholders challenged the plan in multiple forums, citing irregularities and repeated delays.
Since then, JSW has managed to turn around BPSL’s operations and ramp up its capacity from 2.75 mtpa to 4.5 mtpa. “What was a 2.75 mtpa sick unit now stands proud as a profitable company with an enhanced capacity of 4.5 mtpa, employing 25,000 people,” the company said in a statement.
According to Jayant Acharya, joint managing director and CEO of JSW Steel, BPSL’s capacity will be further ramped up to 10 mtpa by 2031 in addition to JSW Steel’s 51 million tonnes capacity expansion target by the same year.
Keeping things clean
The complex deal structure was designed to make the deal clean for the Japanese partner, said Saurabh. “JFE was far more comfortable, given BPSL and its past history, to do this in a structure which is a clean entity which does not have past history,” he said.
JSW Steel benefits by reducing its debt, strengthening its balance sheet and accelerating its growth, at the same time separately the JV will be charting its own path of growth with technologically intensive, high value products, said Acharya in the media briefing.
A stronger balance sheet allows the company to pursue its larger expansion plans from raising India capacity to 51 million tonnes and beyond, to accelerating upcoming projects at Vijayanagar, Paradip, and the new green steel site.
The JV structure
In the joint venture, JSW and JFE will have equal control, equal board representation, and shared operational responsibilities, said Kaustubh Kulkarni, JSW’s group head of banking mergers & acquisitions and strategic financing in the same media briefing. JSW will lead areas where local experience is vital, while JFE will lead high-technology functions, he added.
“This is a strategic investment for JFE to participate in the India growth story. JSW will be able to deleverage its balance sheet by ₹37 billion ( ₹37,000 crore) through a mix of fund infusion and de-consolidation, which will help them to accelerate growth plans,” said Sumangal Nevatia, director at Kotak Securities.
Long history of JSW-JFE partnership
To be sure, JFE first invested over $1 billion in JSW Steel in 2010, when the Indian steelmaker was bouncing back from the brink of bankruptcy in the late 1990s and looking to pare debt. The investment not only helped JSW strengthen its balance sheet, but also gave it access to several automotive clients of the Japanese steelmaker.
The two steel companies had then decided to cap the shareholding of JFE in JSW at 15%. The understanding holds to this day, when JSW Steel has accumulated significant debt as it rapidly expands its production capacity in India. JFE's investment in a subsidiary of JSW Steel will ensure that the cap remains, even as the steelmaker gets access to the Japanese capital.
At ₹15,750 crore, this is one of the largest foreign direct investments by a Japanese firm in India and comes close on the heels of Sumitomo Mitsui Banking Corporation investing ₹13,483 crore for a 20% stake in Yes Bank. Other notable investments by Japanese firms in India include Daiichi's $4.6 billion investment to acquire a 64% stake in Ranbaxy in 2008 and NTT Docomo's $2.7 billion investment to acquire a 26.5% stake in Tata Teleservices in 2009.