Tata, Nippon ink pact to set up JV for value-added steel

Both companies on Friday signed on the dotted line to for India's first Continuous Annealing and Processing Line

Nippon is the third Japanese company to enter India to cater to the growing demand from the auto sector

BY Lalatendu Mishra
Mumbai

Tata Steel Ltd (TSL) and Japan's Nippon Steel Corporation (NSC) have decided set up a joint venture (JV) company with an investment plan of Rs 2,300 crore to manufacture high-grade steel sheets for the automobile industry.

Both companies on Friday signed on the dotted line to for India's first Continuous Annealing and Processing Line (CAPL) at Jamshedpur. This unit will produce of 600,000 tonnes of automotive cold-rolled steel per annum.

While Tata Steel will hold a 51 per cent stake in the venture, Nippon Steel will hold the balance 49 per cent. The project will have a capital cost of Rs 2,300 crore and is expected to be operational in 2013, Tata Steel said.

The joint venture is part of Tata Steel's strategy to produce value added steel, and the company will source steel from Tata Steel's plant in Jamshedpur.

The JV company is expected to be incorporated within one month. As per the agreement, Nippon Steel will nominate the chairman while Tata Steel will nominate the managing director for the new company.

This will address the demand of a growing Indian automotive industry for high-grade cold-rolled steel sheets. For the two steel giants which have a long history of cooperation in areas of mutual interest, this has led to a further strengthening of partnership through the formation of the joint venture, Tata Steel said.

The new venture will benefit from Nippon Steel's world class technology for production of high-grade cold-rolled steel sheet and Tata Steel's leadership position as a supplier to the Indian automotive industry.

With this, one more Japanese company has entered the market to cater to the growing demand of cold rolled steel sheets by automobile manufactures.

In July last year, Japan's JFE Steel Corporation invested $1 billion in JSW Steel Ltd - to pick up a 14.9 per cent stake in the Indian company - for manufacturing auto grade steel.

Similarly, in December, Essar Steel Ltd and Kobe Steel of Japan entered into a MoU to set up a JV for advanced high-strength steel sheets used in automotive and other applications.