JSW Steel, the country’s third-largest steel maker, may take another six months before Japan’s second-largest steel company, JFE Holdings, buys a stake in it.
Sajjan Jindal, vice-chairman and managing director of JSW Steel, today said JFE might pick a 5-15 per cent stake in the company. He was talking to reporters after the annual general meeting (AGM) of the company in Mumbai.
Last November, both companies had announced a strategic tie-up to produce steel for the automobile industry.
Shares of the company today fell 1.3 per cent to Rs 1,048.90 on the Bombay Stock Exchange. The stock has lost 22 per cent from a high of 1,350 on 26 March.
The demand for steel in India is expected to rise by 14 per cent this financial year as the government increases spending on infrastructure such as roads, ports, bridges and power projects. The demand for steel is also rising on the back of higher demand for cars and passenger vehicles.
Japanese rivals, including Nippon Steel and Sumitomo Metal Industries, are also in talks with Indian partners for possible alliances to tap surging demand in Asia’s third-biggest car market. Nippon and Tata Steel have agreed to make auto-grade steel in India, while Sumitomo may buy a stake in Bhushan Steel’s proposed mill in eastern India. Sajjan Jindal also expressed concern over import of cheap steel. “We shall continue to impress upon the government to take appropriate steps and implement policies, which will arrest this trend,” he told shareholders in the AGM.
The company aims to raise its capacity to 10 million tonnes per annum by March 2011, from 8 million tonnes. Commenting on the recent fall in steel prices, Jindal said it had fallen mainly on account of destocking. He said, “The real demand for steel is still intact.”