JSW Steel Ltd is forming a joint venture with Japan’s Marubeni Itochu Steel Inc., Tokyo, (MISI) to set up a steel processing centre in North India, under the name of JSW MI Steel Service Centre Pvt Ltd.
JSW will hold 50 per cent of the equity and the remaining 50 per cent will be held by MISI. The project will absorb Rs 122 crore in capital, half of which will be funded through equity (equally from both the partners) and the rest through debt raised from banks.
The first phase of the project is expected to come on stream in FY2013 with an initial installed capacity of 180,000 tonnes per annum. The JV will be equipped to process flat steel products such as hot-rolled, cold-rolled and coated products, with a view to offer timely solutions to the automotive, white goods, construction and other value-added segments, according to a company statement.
Commenting on the joint venture, Seshagiri Rao, joint managing director & group chief financial officer of JSW Steel, has said that the rapid growth of the Indian steel industry offers tremendous opportunity for supply of high-end processed steel and through the JV, JSW can leverage the global sales network of the service centre operations of MISI.
For Sajjan Jindal-led JSW, this comes as yet another Japanese partnership. Last year, Japan’s second largest steel maker JFE announced that it would be buying around 14.99 per cent stake in JSW Steel for about $1.02 billion (Rs 4,800 crore) in what was pegged as one of the biggest foreign direct investment deals in metal and mining space till date.
JFE also got the right to nominate a director on the board of JSW Steel. It also entered into a foreign collaboration agreement, technical assistance agreements for automotive steel, general technical assistance agreements for plant performance improvement and substrate supply agreement with JFE.
That transaction was part of a strategic partnership announced in November 2009 where the world’s sixth largest and Japan’s second biggest steel-maker JFE, along with JSW Steel, had announced that they had struck a partnership pact to co-operate in developing automotive grade of steel.
Late last year, JSW had also struck another large strategic deal to become the largest shareholder in debt-laden steel firm Ispat Industries, catapulting it to become India’s largest steel-maker in terms of production capacity.
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