JSW Steel Ltd., India’s biggest producer, is interested in snapping up two struggling rivals, Bhushan Steel Ltd. and Monnet Ispat & Energy Ltd., as part of an industry-wide wave of consolidation sparked by a new bankruptcy law designed to clear-out distressed assets.
The Mumbai-based company will partner with Japan’s JFE Holdings Inc., which holds a 15 percent stake in JSW Steel, and other investors to bid for the assets, Sajjan Jindal, chairman of JSW Group, said in an interview with BloombergQuint at the World Economic Forum’s meeting in Davos. The acquired companies would be standalone assets and not part of JSW Steel to begin with, he said.
“The idea is to manage the show, the idea is to run the business profitably and once they turn around, then we will merge them and thereby control the company,” he said. “So right now, we are not looking to have the majority.”
India’s insolvency law has set off a contest for more than $26 billion of steel assets, spurring interest from metals giants such as ArcelorMittal and Vedanta Resources Plc. Bidders are being lured by buoyant steel prices and the prospect of rising demand, powered by Prime Minister Narendra Modi’s investment program to upgrade India’s infrastructure.
A JFE spokesman said the company is discussing possible expansion in India with its partner, but no decision had been made to bid for Bhushan Steel or other assets.
“India has a long way to go to build this country and steel is the basic material which is needed for building the nation, building the infrastructure,” Jindal said. The sector will see a lot of consolidation as bigger players buy up smaller mills, which haven’t been very efficient in the past, he said.
Thursday marks the deadline for bids for Bhushan Steel. JSW Group is also eyeing the assets of Binani Cement Ltd. and the power business of Jaypee Associates Ltd., Jindal said.