JSW Steel Targets Major Debt Reduction After Selling 50% BPSL Stake to Japan’s JFE Steel

JSW Steel is set to significantly strengthen its balance sheet after announcing a major strategic transaction involving its subsidiary Bhushan Power and Steel Ltd (BPSL). The company has decided to sell a 50% stake in BPSL’s steel business to Japanese steel giant JFE Steel, a move expected to sharply reduce JSW Steel’s debt burden and accelerate its long-term expansion plans.

The announcement was made by JSW Steel’s top management during a press briefing in Mumbai on December 3.

Massive Deleveraging Expected: ₹37,250 Crore Debt Reduction

JSW Steel’s Chief Financial Officer Swayam Saurabh confirmed that the transaction will help the company reduce ₹37,250 crore in debt by the first half of FY27.

• As of September 30, 2025, JSW Steel’s consolidated net debt stood at ₹79,153 crore.

• The deleveraging exercise is expected to improve the net debt-to-EBITDA ratio by at least 1x, strengthening the company’s financial profile.

This makes the deal a crucial financial milestone for JSW Steel at a time when the company is preparing for long-term capacity expansion.

JFE Steel’s Investment: One of the Largest by a Japanese Firm in India

Japanese steelmaker JFE Steel has committed an equity investment of ₹15,750 crore for the deal.

• This marks one of the biggest Japanese investments in the Indian steel sector.

• JFE Steel already holds a 15% stake in JSW Steel.

• The partnership between the two companies also spans the joint venture JSW JFE Electrical Steel, which manufactures steel for electrical transformers.

The new BPSL transaction further deepens the strategic collaboration between the two steelmakers.

Also Read: Fitch Raises India’s FY26 Growth Forecast to 7.4% as Private Consumption Strengthens

Why the Deal Matters for JSW Steel’s Growth Plans?

JSW Steel’s Joint MD & CEO Jayant Acharya said the stake sale supports JSW’s larger ambition to expand its steelmaking capacity beyond 51 MTPA by FY31.

He highlighted:

• The BPSL plant currently operates at 4.5 MTPA.

• Available land at the site can support expansion up to 10 MTPA, taking JSW’s total capacity beyond its original 51 MTPA target.

Acharya also confirmed accelerated growth plans at key facilities, including:

• Vijaynagar

• Paradip

• Salav

He added that JSW Steel’s previously announced long-term capex plan of ₹1 lakh crore is now expected to increase.

A Complex but Strategic Deal Structure

The entire JSW–JFE transaction for BPSL’s steel assets is structured across multiple steps.

Stage 1: Slump Sale of ₹24,283 Crore

The first phase includes:

• Transfer of BPSL’s steel assets to a new subsidiary, JSW Sambalpur Steel.

• The slump sale is valued at ₹24,283 crore.

• JFE Steel has funded ₹7,875 crore, which is half of its equity commitment, to kickstart the process.

JSW Sambalpur Steel will eventually be jointly controlled by JSW Steel and JFE Steel.

Stage 2: Fresh Debt Raising

Executives confirmed:

• ₹17,000 crore in fresh debt will be raised at the level of both the new subsidiary and BPSL.

• After this, the second tranche of JFE’s equity will be released.

Additionally:

• ₹5,000 crore of BPSL’s debt will be shifted from JSW Steel’s consolidated books to the joint venture.

Total deleveraging: ₹37,250 crore.

Joint control for JFE Steel in JSW Sambalpur Steel will be established once the first tranche of payment is completed, which is expected before the end of the current financial year.

Why the Complex Structure?

According to CFO Swayam Saurabh:

• JFE Steel preferred a “clean” structure for the transaction.

• The decision is influenced by BPSL’s history, as the asset was acquired through the Corporate Insolvency Resolution Process (CIRP).

JSW Steel acquired BPSL in 2021 through a ₹19,700 crore resolution plan.

The resolution had faced multiple legal challenges from regulatory bodies, various entities, and BPSL’s former promoters.
However, in September 2025, JSW Steel received a favourable verdict from the Supreme Court, clearing the final legal hurdle and approving the resolution plan.

BPSL Turnaround: A Core Strength in the Transaction

JSW Steel emphasised that it has successfully transformed BPSL into a:

• Cash-generating

• Profit-making

• Efficient steel manufacturing unit

The turnaround provides strong justification for attracting JFE’s investment and helps both companies create a scalable asset with long-term growth potential.

Conclusion

The partnership between JSW Steel and JFE Steel marks a significant milestone in India’s steel industry. With the deal expected to cut JSW Steel’s debt by ₹37,250 crore and unlock expanded capacity potential, the company is positioning itself for faster growth and stronger financial resilience.
For JFE Steel, the move provides deeper access to India’s expanding steel market and strengthens its global footprint.

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