ET reported that Nippon Steel and Sumitomo Metal, the two Japanese steelmakers which are merging to create the world's second largest steel company, are likely to retain long standing ally, TATA Steel, as their lone partner in India. They may compensate the second partner, Bhushan Steel to avoid possible project duplication and competition issues.
According to three people familiar with the development, while the four party negotiations are still going on and no conclusion has been reached so far, an established technical collaboration between Nippon Steel and TATA Steel and the slow progress between Sumitomo and Bhushan for a Greenfield project in West Bengal, have been cited as the main factors for a single partner.
Bhushan Steel, a leading manufacturer of high value steel used in consumer goods and cars, has a marketing and technology tie up with Sumitomo Metal which is valid for six years. The two companies are also in talks to jointly build six million tonne steel plant in West Bengal for INR 30,000 crore. While the talks for the West Bengal project have been continuing for about two years, nothing has been agreed so far.
However, TATA Steel and Nippon signed a joint venture agreement in January this year to build a facility for making automotive cold rolled steel at Jamshedpur, where TATA Steel will hold 51% and Nippon 49% stake. The project will be built for INR 2,300 crore and will come on stream in 2013. TATA Steel and Nippon in 2006 had signed partnership for use of Nippon Steel's galvanized steel product Galvaneal. Also, in May, TATA Steel sold 51% equity stake in group company TATA Refractories to Nippon Steel's associate Krosaki Harima Corporation and brought in the Japanese firm as a strategic partner. One person directly involved in the talks said that "The long standing joint venture partnership with Nippon Steel and the large auto grade facilities of TATA Steel will be the main reason for retaining them.”
According to Mr Nitin Johri CFO of Bhushan Steel, We have been talking to Sumitomo for setting up the joint venture project in Bengal. This has not been finalized yet. We are yet to get feedback from Sumitomo on recent developments. We will wait for them to give us a final yes or no. However, it will not have any impact on our technical tie-up with Sumitomo.
Mr Johri also said that if Sumitomo does not participate in the equity of the West Bengal project, Bhushan could explore the option of raising funds through a public issue. (sourced from ET)
According to three people familiar with the development, while the four party negotiations are still going on and no conclusion has been reached so far, an established technical collaboration between Nippon Steel and TATA Steel and the slow progress between Sumitomo and Bhushan for a Greenfield project in West Bengal, have been cited as the main factors for a single partner.
Bhushan Steel, a leading manufacturer of high value steel used in consumer goods and cars, has a marketing and technology tie up with Sumitomo Metal which is valid for six years. The two companies are also in talks to jointly build six million tonne steel plant in West Bengal for INR 30,000 crore. While the talks for the West Bengal project have been continuing for about two years, nothing has been agreed so far.
However, TATA Steel and Nippon signed a joint venture agreement in January this year to build a facility for making automotive cold rolled steel at Jamshedpur, where TATA Steel will hold 51% and Nippon 49% stake. The project will be built for INR 2,300 crore and will come on stream in 2013. TATA Steel and Nippon in 2006 had signed partnership for use of Nippon Steel's galvanized steel product Galvaneal. Also, in May, TATA Steel sold 51% equity stake in group company TATA Refractories to Nippon Steel's associate Krosaki Harima Corporation and brought in the Japanese firm as a strategic partner. One person directly involved in the talks said that "The long standing joint venture partnership with Nippon Steel and the large auto grade facilities of TATA Steel will be the main reason for retaining them.”
According to Mr Nitin Johri CFO of Bhushan Steel, We have been talking to Sumitomo for setting up the joint venture project in Bengal. This has not been finalized yet. We are yet to get feedback from Sumitomo on recent developments. We will wait for them to give us a final yes or no. However, it will not have any impact on our technical tie-up with Sumitomo.
Mr Johri also said that if Sumitomo does not participate in the equity of the West Bengal project, Bhushan could explore the option of raising funds through a public issue. (sourced from ET)
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