Nippon in talks with Tata Steel for JV
The Economic Times — March 29, 2007

Nippon Steel Corporation of Japan, the world's second-largest steel producer, is keen to set up a steel unit in India. The Japanese steel-maker is primarily eyeing production of auto grade steel to meet growing demand from Japanese and other automakers.

On Tuesday, reports from Tokyo quoted a Nippon Steel spokesperson as saying the company is in talks with Tata Steel for a possible venture in India. Tata Steel MD B Muthuraman told ET, "We are conducting a feasibility study at this stage, and nothing has been finalised yet. The two companies have a long-standing relationship."

Tata Steel's deputy managing director (steel) T Mukherjee said, "We have an existing technology agreement with Nippon Steel for automotive steels. I do not want to comment, confirm or contradict any report about setting up a steel plant."

Responding to a possible tie-up with Nippon Steel, a company spokesperson told ET, "We are doing something together in the area of automotive steels. However, projects details have not been firmed up as yet." Reports from Japan said both might jointly invest up to $450 million to set up a 1-million tonne facility in India to make steel sheets for automobile bodies.

A JV would make Nippon Steel the first among Japanese steel majors to set up shop here in India. The reports also quoted a Nippon Steel spokesperson as saying, "We consider automotive-use steel to be a likely business area... but we are seeking various possibilities." Tata Steel's shares rose 0.7 per cent to Rs441 on the BSE on Monday.

Steel industry circles have been rife with speculation about a possible teaming up of the two Asian steel majors ever since Nippon Steel president Akio Mimura and Tata Steel's Muthuraman met recently in New Delhi. "We have a tie-up for use of Nippon Steel's galvanised steel product, 'Galvaneal'. We also have a technology licence from Arcelor for Hot Dip Galvanised (HDG) products for the automotive industry," Mukherjee said.

Under this agreement, Tata Steel has the licence for use of Arcelor's proprietary product, 'Extragal', including the trademark and associated know-how. Extragal, which is a pure zinc HDG product, was specifically developed by Arcelor for the automotive industry.