JSW JFE Electrical Steel Pvt Ltd has entered into a formal agreement to fully acquire thyssenkrupp Electrical Steel India Pvt Ltd (tkES India) in a deal worth Rs.4,051 crore.
This acquisition will help realize the earlier-announced plans of JSW-JFE to enter the grain-oriented electrical steel business.
tkES India is one of the first manufacturers of grain-oriented electrical steel (GOES) in India with its facility located in Nashik, Maharashtra.
The acquisition provides the new owners with access to cutting-edge technology thereby aligning with its strategy of enhancing its value-added portfolio.
New owners
The acquisition will be made by Jsquare Electrical Steel Nashik Pvt Ltd, a wholly owned subsidiary of JSW JFE Electrical Steel Pvt Ltd (J2ES), in turn a a 50:50 joint venture between OP Jindal Group company JSW Steel Ltd and Japan-based JFE Steel Corporation.
Rationale
In February 2024, JFE Steel and JSW established JSW JFE Electrical Steel Pvt Ltd, a joint venture for the production of GOES, with the aim of establishing an integrated manufacturing system for GOES in India. J2ES is expected to commence full production in 2027. Now, through this acquisition, JSW and JFE shall achieve instant market access and can promptly establish an integrated system from manufacturing to sales of GOES in India.
CRGO Steel
Grain-oriented electrical steel (GOES), better known as cold-rolled grain oriented (CRGO) steel or simply CRGO, is a key raw material used in transformers. Worldwide, production of CRGO is controlled by 10-12 companies and the technology is fiercely guarded. India has never come anywhere close to achieving self-reliance in CRGO, and has almost entirely relied on imports.
In an exclusive interaction with T&D India in February 2023, Georgios Giovanakis, Chief Executive Officer, thyssenkrupp Electrical Steel GmbH, had explained that thyssenkrupp produced CRGO steel globally from three locations – France, Germany and India (Nashik plant owned by tkES India.) Giovanakis had estimated that global consumption of CRGO steel is in the range of 3.2 million tonnes to 3.5 million tonnes per year. China is the biggest consumer of CRGO steel, followed by USA and India.
India’s demand is estimated at around 3 lakh tonnes (0.3 million tonnes per year). The Nashik plant of tkES India has capacity of 50,000 tonnes per year. While this plant caters largely to the domestic market, it also exports to 22 countries across six continents, Giovanakis stated. In 2022, thyssenkrupp undertook major investment in its Nashik plant where product quality was upgrade alongside capacity addition.
It is interesting to note that tkES India, which was incorporated in 2000, used to earlier make other steel grades like carbon steel and non-grain oriented electrical steel. The shift towards making CRGO steel actually began in 2018.
