Chennai: Japanese specialty steel and trading majors Sanyo and Mitsui have picked up 29% and 20% stake each in a three-way joint venture with Mahindra group company MUSCO (Mahindra Ugine Steel Company Ltd). As part of the arrangement, Sanyo will offer technical support and Mitsui marketing assistance to the speciality steel joint venture, which will be called Mahindra Sanyo Special Steel Pvt Ltd (MSSSPL).
Sanyo has invested Rs 129 crore and Mitsui Rs 89 crore in the JV while Musco will retain 51% stake. Mahindra Group is also looking to extend the 'relationship' with Mitsui and talks are currently on to see if it can be extended to auto components or aerospace, said sources. As and when necessary, Mitsui will either invest in a partnership with M&M or its subsidiaries or bring in another partner for a 3-way JV.
The board of directors of MUSCO announced the financial closure of the 51:49 JV on Thursday. MUSCO had approved the slump sale of its steel business into its 100% subsidiary Navyug Special Steel Pvt Litd (Navyug Steel) in November 2011.
Hemant Luthra, chairman, MSSSPL, said, "Navyug is now MSSSPL and the name change was approved at the board meeting on September 5 with a structure that will have three Mahindra-nominated directors, two Sanyo-nominated directors, one from Mitsui and one independent director on the JV board. Sanyo is deputing seven people to support technical operations of the JV while Mitsui will support us with marketing. The first products from the JV will be branded Mahindra Sanyo but we will look into using the Sanyo brand on its own in the future."
The JV will not impact the shareholding of MUSCO and the Rs 1,342 crore specialty and alloy steel maker saw its share price rise 2.4% to close at Rs 48.55 on the BSE. The JV will also be the start of more partnerships between Mitsui and Group Mahindra and talks are already on to cover "more sectors".
"We have been working together for three to four years and we would like the relationship to go beyond just one JV," said H Furuhata, GM, investment and planning, Mitsui. "We are already talking of businesses where we have special skills like products and businesses related to iron and steel."
Added Luthra: "We would love to have them participate with us in the auto component business for instance. There are options being explored and we will also talk about aerospace. The arrangement with Mitsui is where they have the technical skills, we will form a straight JV and where they don't, they will find us a tech partner for a three-way JV like MSSSPL."
The objective of the JV will be to use the expertise of all three partners to move up the value chain and target high-end niche markets for specialty steel.
No comments:
Post a Comment