Major Strategic Partnership in Indian Steel Sector
In a significant development for India's metals and mining industry, JSW Steel is in advanced negotiations to sell a 50% stake in its wholly-owned subsidiary, Bhushan Power and Steel Ltd, to Japanese steel giant JFE Steel Corporation. The potential transaction, valued between ₹15,000 crore and ₹16,000 crore, represents one of the largest foreign investments in India's steel sector recently.
According to an executive familiar with the matter who requested anonymity, the deal could be finalized within the current quarter. This strategic partnership would provide JFE Steel with equal ownership in Bhushan Power and Steel while enabling billionaire Sajjan Jindal-led JSW Steel to either reduce its substantial debt burden or finance its ambitious expansion projects.
Background: Resolving a Long-Standing Insolvency Battle
This potential joint venture comes just two months after the Supreme Court of India gave its final approval in September to JSW Steel's ₹19,700-crore resolution plan to acquire the bankrupt Bhushan Power and Steel. The court's decision marked the conclusion of one of India's most protracted insolvency battles that had been ongoing since 2017.
The executive revealed that discussions for this second joint venture with JFE Japan have been underway for over a year. However, the lengthy insolvency proceedings in court had previously delayed substantial progress in these talks.
When approached for comments by Mint, a JSW spokesperson declined to address what they termed as "speculation" but did acknowledge the company's broader strategic approach. "JSW Steel's strategy includes evaluating various opportunities, both organic and inorganic, in India and overseas—including potential collaborations aimed at enhancing scale, efficiency, and global competitiveness," the spokesperson stated.
Financial Implications and Debt Reduction Strategy
The timing of this potential stake sale aligns with JSW Steel's ongoing efforts to manage its financial leverage. According to data presented during the company's July-September 2025 quarterly earnings call, JSW Steel's net debt stood at ₹79,153 crore at the end of the quarter. The company's net debt-to-Ebitda ratio was recorded at 2.97 times during the same period.
During an October post-earnings call, Swayam Saurabh, Chief Financial Officer of JSW Steel, emphasized the company's focus on maintaining healthy leverage ratios. "This year, absolute debt could go up or down," Saurabh noted. "But what we are more positively looking forward to is holding the net debt-to-Ebitda, the leverage ratios below 3x."
Industry analysts view this move as strategically sound given JSW Steel's current financial position and capital expenditure requirements. Sumar Kumar, Assistant Vice-President for Metals and Mining at brokerage Philip Capital, commented that the planned stake sale appears driven by JSW Steel's elevated debt levels and the substantial capital expenditure needed for its capacity expansion projects. "This move would help the company deleverage and strengthen its balance sheet," Kumar observed.
Existing Partnership and Expansion Ambitions
This would mark the second joint venture between JSW Steel and JFE Steel Corporation. Their first collaboration resulted in the establishment of JSW JFE Electrical Steel in 2024, which operates a steel plant in Karnataka specializing in grain-oriented electrical steel sheets used primarily in transformers and large electrical machinery.
The relationship between the two steelmakers dates back to 2010 when JFE Steel Corporation acquired a 15% stake in JSW Steel for ₹4,800 crore, an investment that the Japanese company continues to hold today.
Under JSW Steel's management since its acquisition, Bhushan Steel has seen significant operational improvements. The company expanded Bhushan Steel's production capacity from 2.3 million tonnes per annum (mtpa) in 2017 to 4.5 mtpa in 2025, with plans for an additional 0.5 mtpa capacity expansion already in the pipeline.
Looking beyond this specific transaction, JSW Steel has articulated an ambitious growth strategy aiming to achieve total production capacity of 50 mtpa by 2030. The company currently has projects underway to increase capacity to 41.9 mtpa by FY28 from the present 34.2 mtpa. An upcoming electric arc furnace (EAF) project in Andhra Pradesh is expected to further boost capacity to 42.9 mtpa by FY29.
In earlier discussions with Mint, JSW Steel CEO Jayant Acharya outlined the company's comprehensive expansion approach, which includes evaluating opportunities across existing facilities at Vijayanagar, Bhushan Power & Steel, and the DRI plant at Salav in Maharashtra, along with plans for a major greenfield steel plant at Paradip, Odisha.
