JSW Steel plans ₹9,500 crore NCDs for BPSL JV

What JSW Kalinga Steel is planning

JSW Steel’s unit, JSW Kalinga Steel, is preparing to raise about ₹9,500 crore through rupee-denominated bonds, according to sources cited by The Economic Times. The fundraising is linked to the financing package around the Bhushan Power & Steel (BPSL) business, which JSW acquired through a bankruptcy process. The bond plan sits alongside a broader restructuring of BPSL and the formation of a joint venture with Japan’s JFE Steel.

The proposed issuance is structured as unsecured, zero-coupon, five-year non-convertible debentures (NCDs). The NCDs are planned in two tranches and are intended to fund steps in the corporate structure that transfers BPSL’s steel business into a new operating framework.

Bond structure: tranches, yield and maturity

Sources said the NCD issuance will be split into two base issues: ₹6,000 crore in one tranche and ₹3,500 crore in the other. Although the debentures are described as zero-coupon, they will be redeemed at a premium, implying a yield of about 8.5%. Repayment is expected as a bullet payment at maturity in March 2031.

The notes are expected to include put and call options at three and four years. The instruments are rated AA by Crisil, as per the information shared by sources.

Anchor allocation and issuance details

Anchor investors have already been allocated amounts in both series, according to the same set of sources. The allocation is ₹1,800 crore in Series I and ₹1,050 crore in Series II.

A JSW spokesperson did not immediately respond to a request for comment, according to the report.

Credit support and security package

The proposed NCDs are expected to be backed by joint letters of comfort from JSW Steel and JFE. In addition, the structure includes a 49% pledge over shares of JSW Sambalpur Steel Ltd, and a floating charge over JSW Kalinga’s bank accounts, according to sources.

This mix of support measures is positioned as part of the wider financing package used in the reorganisation of BPSL’s steel business and the creation of the JV framework.

How the proceeds flow into the BPSL slump sale

The proceeds from the bond issuance will be used by JSW Kalinga to extend shareholder loans to JSW Sambalpur Steel. JSW Sambalpur Steel is the entity that will acquire the steel business of BPSL through a slump sale, according to the report.

In practical terms, this creates a funding bridge from the bond investors to the operating structure that will hold and run BPSL’s steel assets after the slump sale is executed.

BPSL resolution backdrop and Supreme Court order

The Supreme Court, in late September last year, overturned its own May 2 order that had directed liquidation of BPSL. Instead, it upheld JSW Steel’s ₹19,700 crore resolution plan for the debt-ridden company.

That judicial turn is a key backdrop to the current financing, because it restored the resolution path and enabled the planned restructuring steps to proceed under JSW’s acquisition framework.

JV economics and valuation details

The transaction values BPSL at an enterprise value of about ₹53,000 crore, the report said. The broader structure includes multiple funding legs. JSW Sambalpur Steel is expected to raise about ₹12,000 crore of operating company debt backed by its assets and cash flows.

JFE will invest ₹7,875 crore for a 25% stake in JSW Kalinga and buy another 25% from Piombino Steel for the same amount. This creates a 50:50 joint venture with JSW Steel.

Parallel fundraising: JSW Steel board’s ₹19,000 crore plan

Separately, JSW Steel Ltd announced on May 23, 2025 that its board approved a fundraising plan of up to ₹19,000 crore, as per an exchange filing. The plan includes raising up to ₹7,000 crore through the issuance of equity shares and/or convertible securities (excluding warrants). It also includes up to ₹7,000 crore through NCDs coupled with warrants convertible into equity shares.

These issuances are intended for Qualified Institutional Buyers (QIBs) and may be executed independently or in combination, subject to shareholder and regulatory approvals. The company said a new enabling resolution would be presented at the upcoming Annual General Meeting, replacing the resolution passed in July 2024 which has since expired.

In addition, the board approved raising up to ₹5,000 crore via secured or unsecured, redeemable NCDs through private placement or public issue. The stated uses include refinancing short-term debt, supporting capital expenditure and working capital, and other general corporate purposes.

Capex and refinancing context

The same broader fundraising coverage also cited JSW Steel’s capex trajectory. It did capex of ₹14,656 crore in FY25, as per an investor presentation. It plans to spend ₹20,000 crore in FY26, ₹21,000 crore in FY27, and ₹20,863 crore in FY28. Nearly 96% of capex is earmarked for India operations, with references including the sinter plant capacity increase in Dolvi (Maharashtra), mining and cost-saving projects, value-added product facilities, and sustenance capex.

Alongside the capital-raising measures, the board proposed a final dividend of ₹2.80 per equity share.

Market reaction in JSW Steel shares

On May 26, JSW Steel shares opened at ₹1,013.50 and fell to a day low of ₹998.90 at 11:31 AM. At around 10:27 AM, the stock was trading 0.71% lower at ₹1,001.30 per share, versus the previous close of ₹1,008.50 on the NSE. During the session, the stock touched an intraday high of ₹1,022.50 and an intraday low of ₹1,001, as per the reported trading data.

Key numbers at a glance

Why the structure matters

The NCD plan at JSW Kalinga and the operating company debt at JSW Sambalpur together show how JSW and its partners are stacking funding at different levels of the structure. The stated use of proceeds for shareholder loans is also specific, because it links the bond raise directly to the entity that will acquire BPSL’s steel business through a slump sale.

Separately, JSW Steel’s board-approved ₹19,000 crore fundraising plan indicates that the group is keeping multiple financing channels open, spanning equity-linked routes and plain debt. The stated uses for those funds include refinancing and capex, which aligns with the capex numbers cited for FY25 through FY28.

Conclusion

JSW Kalinga Steel’s planned ₹9,500 crore NCD issuance, with a March 2031 bullet maturity and an implied yield of about 8.5%, is tied to the financing steps around BPSL’s slump sale and the JSW Steel-JFE joint venture framework. In parallel, JSW Steel’s board-approved ₹19,000 crore fundraising plan adds another layer of funding flexibility, subject to shareholder and regulatory approvals, with the enabling resolution to be taken up at the upcoming AGM.