Financial Daily from THE HINDU group of publications
Friday, Aug 13, 2004
Alliances & Joint Ventures
Arcelor, SAW Pipes sign pact for joint venture speciality steel plant
Mr P.R. Jindal, Chairman, SAW Pipes Ltd, exchanging documents with Mr Francis Vassort, Chairman & CEO, Imphy Ugine Precision Arcelor Group, after signing a joint venture agreement in the Capital on Thursday. - Ramesh Sharma
New Delhi , Aug. 12
THE world's largest steel maker, the 26-billion euro Groupe Arcelor, on Thursday signed a joint venture agreement with SAW Pipes Ltd (SPL), a Jindal group outfit, for setting up a new company called IUP-Jindal Hexa Metals Ltd.
Under the agreement signed by Imphy Ugine Precision (IUP), Arcelor's stainless steel and alloy division, Arcelor will hold a minority stake of 27 per cent in the joint venture company while the Jindals will hold the remaining 73 per cent.
To start with, the joint venture company will have an equity capital of Rs 10 crore. The new plant, to be set up at Rohad in Haryana, will involve a total investment of around $15 million (approx Rs 69 crore). Out of this, $12 million would be in fixed costs while the remaining $3 million will be used to meet the working capital requirements.
The new company is to manufacture stainless steel and nickel alloy precision strips, high value-added products for various industrial sectors such as textile machinery, clock and watch making and electrical equipment.
Land has already been acquired and the plant will have a capacity of 13,000 tonnes. It is expected to employ about 200 people.
Speaking to newspersons after signing the agreement here, Mr Francis Vassort, Chairman and CEO, IUP as well as Chairman of the new company, said that the formation of the joint venture company was part of Arcelor's larger plans of increasing its presence in the Indian market.
Mr Vassort also noted that the Group was looking at more ventures in India.
"Our's is the stainless steel division and so we are setting up a joint venture in the stainless steel sector. Our other divisions are looking at their areas in India. For example, the long products division will be in talks with companies operating in that area," he said.
In June, the CEO of Arcelor, Mr Guy Dolle, during his visit to India, had stated that his company would seek further acquisitions in India and Russia once it completed the deal for controlling stake in Companhia Siderurgica de Tubarao (CST), Brazil's second-largest crude steel producer.
The IUP Jindal plant, Mr Vassort said, would cater to the demand in this part of the globe.
He also mentioned that exporting Arcelor's steel made in the European plants to India were not economical and the company did not want to miss out the opportunities that India is expected to provide over the next few years.
The SPL Chairman, Mr P.R. Jindal, said that the fixed assets of the company's Swastik Foils divisions would be transferred to IUP Jindal wherein IUP would also provide speciality equipment and technology.
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