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Tata Steel-BlueScope venture eyes Rs 1,000-cr turnover

Our Bureau

The joint venture would cater to the SAARC region; a BlueScope unit in Sri Lanka was also expected to move into its fold shortly.

Mumbai , Nov. 23

THE new joint venture between Tata Steel and BlueScope Steel hopes to register a turnover of Rs 1,000 crore by 2010 and stabilise later at a revenue of around Rs 2,000 crore once full capacity kicks in, senior officials said at a press briefing here today.

The 50:50 joint venture, which would offer steel-based solutions for the construction industry, envisages total investment of Rs 1,200 crore, half of that being the equity component. It would have four manufacturing locations — Pune, Bhiwadi, Sriperumbudur and Jamshedpur — and a network of sales offices across the SAARC region.

Of these locations, the first three sites would host facilities specialised in building solutions and be operational by 2006. The facility for making metal-coated sheet, essentially processing cold rolled steel from Tata Steel into `Zincalume,' one of BlueScope's branded metal-coated products, would be commissioned in Jamshedpur by 2008. The same factory would also value-add the metal-coated sheet into colour-coated sheet. From the 250,000 tonnes metal-coated sheet capacity proposed at Jamshedpur, 150,000 tonnes would be processed into colour-coated sheet (BlueScope's brand in the segment is `Colorbond'), the balance 100,000 tonnes would be sold in the market as Zincalume.

The difference in commissioning time between the three building solutions units and the Jamshedpur unit means that Bhiwadi, Pune and Sriperumbudur would have to be supplied with raw material from BlueScope units in South East Asia in the interim, something already happening in the Indian market.

The joint venture's building solutions units would process material fed in from Jamshedpur, into branded finished products such as BlueScope's `Butler' and `Lysaght' metal building solutions.

Between the three building solutions units there would be 56 roll forming lines with Pune as biggest facility, having additionally a line for beams and girders, which go into building framework.

"BlueScope has tremendous strength in providing solutions for the construction industry. We have been in talks for the last year and a half or two. India has not used the power and beauty of steel in the manner it has been done in some of the developed countries," Mr B. Muthuraman, Managing Director, Tata Steel, noted on the just-formalised tie-up. According to him, India consumes three times higher tonnage of cement as compared to steel. The developed world consumes in a roughly 1:1 ratio, a situation that amply reveals the potential for Tata-BlueScope.

"This is a venture that is going to reshape the nature of the construction industry here," he said. "Our belief is that this joint venture would open up an entirely new market," Mr Kirby Adams, Managing Director & CEO, BlueScope Steel, said. Mr Chetan Tolia of Tata Steel has been appointed Managing Director of the joint venture; Mr Mike Courtnall, President (Asian Building & Manufacturing Markets), BlueScope, would be its Chairman.

The joint venture would cater to the SAARC region; a BlueScope unit in Sri Lanka was also expected to move into its fold shortly. Given the involved variables, the size of the market being tapped as also the cost difference between a concrete structure and one of steel, were not available. However, in nine years, Mr Courtnall pointed out, the Chinese market for such steel products used in construction, had grown to $1.5-1.75 billion.

The likely pattern of business would be for a client to submit the architectural drawings to the joint venture, which would then make engineering designs and process the steel into component pieces. Mr Tolia said that select parties would be trained to install the steel structures. He maintained that neither steel as a medium nor the factory based preparation of finished product, restricted customisation. Steel buildings save time in construction, are light weight, have life cycle cost benefits and are earthquake resistant, the company said in its presentation.

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