Sajjan Jindal-led JSW Steel said it will buy controlling interest in Ispat Industries at an enterprise value of $3 billion to emerge as India’s largest producer of the commodity with an annual capacity of 14.3 million tonnes. As per the terms of the deal, debt-stricken Ispat will issue preferential shares worth 41.29 percent of its paid up capital to JSW Steel, a part of the O.P. Jindal group, for around $500 million. JSW Steel will also make a mandatory open offer for 20 percent.

Ispat Industries, having a production capacity of 3.3 million tonnes per annum, will be renamed JSW Ispat. JSW Steel has targeted 34 million tonnes of steel by 2020.

According to JSW Steel, a systematic plan will also be put in place for Ispat by developing synergies in the highly competitive steel market, while facilitating sourcing of key inputs such as coke and power to bring down production costs.

“Besides this, Ispat will also set up a captive coke over plant, pellet plant and power plant to achieve complete integration of steel making facilities over a period of 36-48 months,” the company said in the statement.