It’s a proposal that’s been up in the air for some time now — but those connected with it are positive of it coming to fruition.
A proposed joint venture (JV) between India’s state-owned Steel Authority of India Limited (SAIL) and the world’s largest steel producer ArcelorMittal for an automotive steel plant in India may be sealed within the next two months.
The new plant, when set up, will provide support to India’s automobile sector, and also offer specialized technologies to SAIL. It will focus on producing specialized grade steel products for defense, space and automobiles.
Reports in the media here talk of the agreement being signed soon, perhaps in the next 60 days. Incidentally, the deadline for sealing the deal had ended in May this year.
A report in the Sunday Guardian, too, said the deal was in its “final stages.”
The two companies signed a memorandum of understanding (MoU) in May 2016 for setting up a state-of-the-art automotive steel manufacturing facility under a JV arrangement in India with an estimated cost of Rs 5,000 crore (approximately U.S. $765 million).
But the final agreement has been delayed due to financial negotiations.
According to the Guardian report, quoting sources, a feasibility report on the JV had been prepared by the Joint Working Group (JWG). The final draft of the agreement was ready.
SAIL has already entered into a strategic agreement with Korean steel company Posco for wide-ranging technical services for the former’s IISCO Steel Plant (ISP) at Burnpur to assist in realizing the benefits from its state-of-the-art plant. Posco will provide technical supervising services, including its know-how relating to operation and maintenance of coke-making, iron and steelmaking, and wire rod mills.
But even as everyone awaits the final word from SAIL and ArcelorMittal on the new plant, the Indian Government is eagerly waiting on the sidelines for the final call.
Recently, it tried to gently nudge the two players to hurry up with the signing of the proposed JV.
Steel Joint Secretary Sunil Barthwal was quoted in The Economic Times as saying that both parties had set certain timelines, and each was moving according to that.
While speaking to reporters on the sidelines of India Steel Summit 2017 organised by Assocham, Barthwal acknowledged that the government had asked both parties to expedite the process. There were some technical issues with regard to the JV which the government was trying to sort out, the official said.
A beleaguered SAIL, too, is keen that the JV comes through. Suffering from losses, however, it reported lower losses in the quarter ended September of the current fiscal year. Much of it was attributed to the total standalone income of the firm rising by 8% in the July-September period of this fiscal year (up from the corresponding quarter in the previous fiscal year).