Tatas to set sail with Japan's NYK

The Tata group is in talks with leading Japanese shipping line NYK for setting up a joint venture.

According to the contours of the arrangement being discussed, NYK will have 50 per cent in the venture, and the balance will be held by a group of Tata companies, including Tata Steel.

A Tata Steel spokesman confirmed the development, saying the Tata group was looking at opportunities for setting up a 50:50 shipping venture with NYK. The initiative was a Tata group move, in which Tata Steel would only be one of the players.

The venture will benefit the Tata group in two ways. It will bring down logistics and transportation costs significantly, and also make NYK's huge shipping line accessible.

However, the exact details of the arrangement and the investment will be known later, as a study on the scope of the joint venture is currently under way. The joint venture company can also be a full-fledged shipping firm.

On March 31, 2006, the NYK group had a fleet size of 709, which included 141 container ships, 97 bulk carriers (Capesize), 156 bulk carriers (Panamax and Handymax), 46 wood-chip carriers, 113 car carriers, 27 reefer carriers, 66 tankers, 22 LNG carriers, and three cruise ships. NYK's consolidated revenues stood at 1,923 billion yen in FY06.

Tata Steel has already announced that it wants to have control over logistics, in the wake of its massive expansion plans.

As part of this effort, the company is building an all-weather deep-water port in Orissa, under the Dhamra project, in partnership with L&T. The port will handle bulk cargo, with a maximum capacity of 25 million tonne.

The other Tata group companies have set their sight on the global arena, and having control over logistics makes immense sense.

The joint venture with NYK, if it materialises, will not be the Tata group's first association with the shipping company.