Sanyo Special Steel and Mitsui & Co. announced on Friday they agreed to launch special steel making joint venture in India and signed joint venture agreement. They make special steel bar through integrated steel operation with electric furnace with Mahindra Ugine Steel (MUSCO), which is Indian special steel maker of Mahindra Group, to meet growing demand from Indian users including transplants of Japanese manufacturers.
The joint venture is the first offshore integrated production plant for Sanyo Special Steel. Sanyo Special Steel contributes to the joint venture in production and technology areas while MUSCO manages the venture and Mitsui & Co. provides marketing function. They combine the expertise for the venture to follow growing demand in India. MUSCO, which operates special steel making and selling and stamping units in India, separates special steel unit as wholly owned subsidiary. The subsidiary transfers the business to new company for the joint venture. After the required processes including Indian authorities’ approval, Sanyo Special Steel and Mitsui & Co. accept capital increase of the new company by autumn 2012. MUSCO controls 51% of the joint venture with 29% share by Sanyo Special Steel and 20% share by Mitsui & Co. Sanyo Special Steel will contribute near 2 billion yen and Mitsui & Co. will pay around 1.3 billion yen for the joint venture. The new company has 45 tonnes electric furnace, 1,200 tonnes press machine, blooming mill, continuous mill and ring plant to make special steel bar and forging bar at the plant in Khopoli, Maharashtra. MUSCO has annual 120,000 tonnes of production capacity and has 3-4% share in Indian market. Special steel demand increases by annual 10% in India. Sanyo Special Steel’s senior managing director Yutaka Tsukamoto said at press conference on Friday the plant is the first offshore integrated production for the firm while the firm has steel processing joint ventures in USA and China. He emphasized the joint venture provides chance for advantage in Indian market with many rivals. Mitsui & Co.’s executive managing officer Motomu Takahashi said the firm tries to expand the business by bringing world top class technology in growing Indian market.