Calcutta, Feb. 14: Japanese steel maker JFE has raised its stake in India’s JSW Steel Ltd to 15 per cent by taking advantage of the new takeover code.

JFE, the world’s fifth largest producer of the alloy by output, had bought into Sajjan Jindal’s JSW in October 2010 by investing Rs 4,800 crore to pick up a 14.88 per cent stake.

Today the company said it had raised the stake to 15 per cent by partly converting global depository receipts (GDR) into equity shares.

“The increase is based on an agreement between JFE Steel and JSW Steel, and is in line with Indian Sebi Takeover regulations that were revised last year,” a JFE Steel statement said.

JFE had also subscribed to global depository receipts following its equity buy into JSW for Rs 600 crore.

With the latest increase in ownership, JSW Steel will become an “equity-method affiliate” of JFE Steel from this quarter.

Under this method, the Japanese entity is legally obliged to record its proportionate share of income or loss resulting from such investments in its results for a given period.

However, the stake rise will not have any effect on the JFE Holdings’ consolidated results forecast.

“This change has no effect on JFE Holdings’ consolidated results forecast that the company announced on January 30,” the statement said.

JFE has given a guidance of a net loss of 40 billion yen ($517 million) for the year to March 31.

JFE had in the past expressed its desire to raise stake in JSW Steel. JFE had bought the shares for Rs 1,500 apiece.

However, it could not do so as the Japanese company had to make a mandatory open offer of 20 per cent stake in JSW.

The new takeover code has allowed companies more leeway to raise stake.

According to the new Sebi rules announced last November, the open offer trigger level was increased from 15 per cent to 25 per cent and the open offer size was increased from 20 per cent to 26 per cent.

The JSW stock today closed at Rs 828.05, up 1.83 per cent compared with the benchmark BSE Sensex, which added 0.43 per cent.