Tata Metaliks cuts Rs 150 crore deal with Japanese firm
The Economic Times — March 30, 2007

The Tata group has announced fresh investment plans for West Bengal. Towards this end, Tata Metaliks has forged a Rs 150-crore joint venture with Kubota Corporation of Japan to manufacture ductile iron (DI) pipes that are widely used in water supply.

The project cost will be funded through an equal mix of debt and equity. Of the equity portion of Rs75 crore, Tata Metaliks will pick up 51 per cent and Kubota Corporation 44 per cent, while the balance 5 per cent will be held by Metal One of Japan. The joint venture was approved by the board of Tata Metaliks at its meeting on Thursday.

The new company will be a subsidiary of Tata Metaliks. The manufacturing unit will come up on 40 acres in Kharagpur, West Bengal, adjacent to Tata Metaliks' existing facility which produces foundry grade pig iron.

T Mukherjee, chairman, Tata Metaliks, said: "The new company will manufacture 1.1 lakh tonnes of DI pipes per annum at Kharagpur. Our partner Kubota Corp is a world leader in DI pipes. Together we hope to garner a significant share of the growing market for DI pipes in the country." The new venture will use liquid pig iron from Tata Metaliks and is likely to be operational by 2009.

Tata Metaliks also held discussions with other leading global DI pipe makers before firming up the venture with Kubota, Mukherjee added. Incidentally, leading manufacturers in this category include Xing Xing of China, St Gobain of France and US Pipes.

The domestic market for these DI pipes is pegged at around five lakh tonnes but it is growing at around 20 per cent every year. Other Indian manufacturers of these pipes include Electrosteel Castings and Saw Pipes. While cast iron pipes are predominantly used in water transmission, a growing awareness about better quality and longevity of DI pipes has led to its growth in recent years.

Responding to a query, Mukherjee said Tata Metaliks expects to produce around 4.5 lakh tonne of pig iron in 2006-07. The volume is likely to rise to 6 lakh tonne in 2007-08 with the commissioning of all the three blast furnaces at the company's Redi unit which was acquired from Usha Ispat in January 2006.

However, the company's plan to set up a mini steel unit at Kharagpur is yet to see any progress due to delay in getting land from the state government. We require about 300 acres. The state government has got a fair bit of land but it is not all contiguous. "We would require more time to acquire the land," Mukherjee said.