Japan JFE says aims to boost ties with India's JSW

Mon Aug 22, 2011

TOKYO Aug 22 (Reuters) - JFE Steel Corp , the world's fifth-biggest steelmaker, said on Monday it would strengthen its ties with India's JSW Steel Ltd by either boosting its stake in the company or increasing its presence on the smaller firm's board.

Under so-called 'equity-method' accounting rules, JFE could report part of the Indian company's net profit in its consolidated results if it holds more than 15 percent of its stock or has representation on its board of directors.

"We hope to make JSW an equity-method company of our group," Eiji Hayashida, president of JFE Steel, told the Nikkei business daily in an interview on Sunday.

"I have told (managing director Sajjan) Jindal about our intentions and we have had no negative response so far."

JFE last year spent about $1 billion acquiring a 14.9 percent stake in JSW, India's No.3 steelmaker, in an attempt to gain a foothold in the fast-growing Indian market.

The stake, just shy of the level that would have triggered a mandatory public offering at that time, was JFE's first major capital investment in a foreign peer.

Hayashida also said in the Nikkei that JFE planed to join JSW's project to build a new integrated steel mill in India and that it was in talks with management on its ownership ratio.

"Our ownership will be below 50 percent," he said, citing potential difficulties for a foreign company in managing large numbers of local workers.