The two firms have been collaborating for several years.
Delhi-based Bhushan Steel may look at doing a JSW Steel-JFE-like deal with Japan’s Sumitomo Metal Industries.
Sources said Bhushan might explore offloading around 2.1 million shares of its 42 million shares to Sumitomo. This was in addition to the joint venture opportunity being explored for the six-million-tonne Bengal steel project.
However, Neeraj Singal, managing director of Bhushan Steel, said nothing had been finalised for the Bengal project and a decision would be taken by the end of December. Asked if it included a larger plan of offloading a 5 per cent stake in Bhushan Steel, Singal said: “That is not part of the discussion now.”
Sources said Bhushan was also talking to financial institutions for the 5 per cent stake, but Sumitomo was the only metal player in the fray. “We have a relationship with Sumitomo since 1994,” said sources. A formal proposal from the Japanese company was still awaited.
Sumitomo is also a technical partner for Bhushan Steel’s Orissa project, where the company has a three-million-tonne plant and would be increasing capacity to six million tonnes by 2012.
If the deal with Sumitomo for Bhushan Steel materialised, then it would be the second Indian steel company to go for such a deal with a Japanese company. Recently Sajjan Jindal-controlled JSW Steel announced a collaboration with JFE Steel Corporation, the world’s sixth largest steelmaker, for a manufacturing and mutual shareholding agreement. However, Bhushan’s deal was unlikely to have a mutual shareholding arrangement.
JSW Steel and JFE Corporation would also partner to take forward the proposed 10-million tonne integrated steel project at Salboni in Bengal, where JSW plans to start construction by 2011.
Industry sources said, international companies were increasingly looking at being a part of the India growth story.
Bhushan Steel had initially planned a two million tonne steel plant in Bengal, which has now been scaled up to six million tonnes. The investment, too, had gone up from Rs 8,800 crore to around Rs 18,000 crore.
The state government would acquire land for the project. The public hearing process has already been completed.
Sources said the land requirement for the project was 2,550 acres. However, the project might have to be realigned, as a part of the project was in Eastern Coalfields’ licensed area.
