Tata Steel India has inked a joint venture (JV) with Japan’s Nippon Steel Corporation (NSC), the world’s No. 4 steel maker, for setting up a Rs 2,300-crore specialty steel-making line at Jamshedpur to cater to the domestic auto industry.
The JV would set up India’s first continuous annealing and processing line to produce 600,000 tonnes automotive cold-rolled steel a year, Tata Steel said in a filing to the Bombay Stock Exchange. It would source steel from Tata Steel’s Jamshedpur plant. The agreement was signed in Tokyo, Japan.
Tata Steel will hold 51 per cent in the JV and the rest will be held by NSC. Tata Steel said the plant was expected to come on stream in 2013.
The Indian company said, “It is a part of Tata Steel’s strategy to produce value added steel. The JV is expected to be incorporated within one month. The chairman of this JV will be nominated by Nippon Steel and the managing director will be nominated by Tata Steel.”
The two companies aim to capture more of the local demand for auto steel, growing at 13-15 per cent a year. Tata Steel has already around 40 per cent share of the domestic auto steel market. Its European subsidiary, Tata Steel Europe, too, has its own auto-grade technology. But according to Tata Steel, the technology cannot be used in India.
Koushik Chatterjee, group chief financial officer, Tata Steel, had earlier told Business Standard that: “Europe and India use different kinds of auto steel. In Europe, a more galvanised steel is used because of corrosion, snow issues, etc. In India, it is more continuous annealing steel.”
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Tata Steel Europe and India are working jointly to develop newer varieties of steel and have set up a common research and development arm.
Chatterjee had said, “We work jointly and the auto steel product development is happening jointly in our common R&D. Now, there is a group R&D which reports to both the CEOs (Europe and India). The agenda is drawn and the mandate is given that in auto steel we have to see what we can do. So, where Tata Steel Europe and India can do together, we must do together. And that is where we have the biggest power of leverage.”
We will go to a partner when between us we don’t have anybody. Some of the requirements of auto steel in India and Europe are inherently different.”