In a major development for the Indian steel sector, Sajjan Jindal-controlled JSW Steel and Japan’s second-largest steel maker, JFE Steel Corporation, have entered into a collaboration agreement to produce automotive steel in India as well as to explore mutual stockholding options.
The agreement was signed in Mumbai on Thursday. The two parties would set up a facility to manufacture automotive steel, possibly in West Bengal. The scope of the agreement covers joint service activities, including application engineering and product development for automotive customers, the companies said.
Jindal and Bada said a final decision is yet to be reached on the amount of investment and mutual stockholding.
However, newspaper reports in Japan said JFE is likely to pick up a 10 per cent stake in Jindal for approximately Rs 1,550 crore to Rs 2,065 crore.
JFE and JSW have arrived at a broad consensus to explore the possibility of mutual stockholding, production of steel for uses other than automotive, energy reduction and procurement of raw material, both in India and abroad. These are part of 10 areas in which the two would collaborate.
JFE, which is a leader in automotive steel manufacture in Asia, has been looking to set up a plant in India to cater to Japanese auto majors like Nissan and Toyota who have developed manufacturing bases in the country. It said it had found the perfect partner in JSW.
“JFE is determined to intensify its relationship with JSW….. This agreement shall also provide JFE an avenue to look into future possibilities of development in India. India has exceptional growth potential,” said Hajima Bada, president & CEO, JFE Steel.
“It (the collaboration) opens up new vistas for our expansion projects and is an important milestone in JSW’s mission of moving up in the value chain,” said Sajjan Jindal, vice chairman and managing director, JSW Steel.
The JSW Steel stock, which gained Rs 64 on Wednesday, finally closed with a loss of Rs 6.30 at Rs 959.35 on the Bombay Stock Exchange.