Posted on 21 Oct 2024
Thyssenkrupp has sold Indian subsidiary thyssenkrupp Electrical Steel India Private Ltd to JSW JFE Electrical Steel (J2ES) for around $480 million. The buyer is a 50-50 joint venture between JSW Steel and JFE Steel.
The transaction is subject to approval from the Competition Commission of India.
Thyssenkrupp Electrical Steel India is part of thyssenkrupp’s Electrical Steel business unit, which belongs to thyssenkrupp's Steel division. Its main site is located in Nashik, around 150km from Mumbai. The company currently employs around 500 people.
The sale of the Indian company is taking place for market-strategic reasons, Kallanish hears from the German steelmaker. “The supply of raw materials from thyssenkrupp's German steelworks to India is cost-intensive and weakens our competitiveness in India in the long term,” says Dennis Grimm, thyssenkrupp Steel executive board spokesperson. “Setting up our own local raw material production is not economically feasible for us. Compared to our local competitors, we will not be able to achieve the same economies of scale.”
The proceeds from the sale will strengthen the steel segment's capital base and will be used by thyssenkrupp, among other things, for the green transformation. This also includes the activities of thyssenkrupp Electrical Steel. As demand for grain-oriented electrical steel remains high in the wake of the global energy transition, the company will increasingly focus on growth markets in Europe and North America, it says.
J2ES was set up in February for grain-oriented electrical steel (GOES) production. It will begin full production in 2027. This acquisition will help it gain instant market access and also help immediately establish “an integrated system from manufacturing to sales” of GOES in India, JSW Steel notes in a bourse filing.
JSW Steel joint managing director and chief executive Jayant Acharya says: “The market for GOES is growing rapidly. This acquisition will enable the consortium of JSW and JFE to manufacture this product in India and supply it to customers in India and globally, thereby also enabling import substitution and hence taking another step towards a self-reliant India.”
Source:Kallanish
