Loss making steel giant SAIL (Steel Authority of India) on Wednesday said its board has approved a joint venture with ArcelorMittal to manufacture automotive steel.
"The board of SAIL in its meeting held on 12th December 2017 has approved the proposal for the signing of a legally non-binding term sheet with ArcelorMittal S.A. for entering into a JV for automotive steel business," Steel Authority of India (SAIL) said in a filling to the Bombay Stock Exchange. However the definitive agreements "will be finalised in due course subject to financial viability", SAIL said.
The government is keen on the ventures as it wants its successful PSUs to be involved in new "Make in India" projects with foreign partners who could bring in new technology. The automotive steel plant, likely to be in Telangana, would be a reward to an ally (TRS) for staying the course with the ruling NDA coalition ahead of the general elections in 2019.
SAIL suffered a net loss at Rs 539.1 crore in the quarter ended September 2017 against loss of Rs 731.6 crore in the year ago period. Revenue has, however, increased 21.3 per cent at Rs 13617 crore against Rs 11225 crore a year ago.
Officials of the PSU said they were yet to thrash put differences with the ArcelorMittal over royalty fees to the latter and the equity takes in the venture.
Steel ministry officials had said earlier that the 1.5 million tonne venture is likely to be 50:50 one, with SAIL supplying the raw materials from its Rourkela steel plant. On the equity structure, SAIL wanted a majority holding in the similar to the Tata’s automotive steel plant venture with Japan's Nippon Steel and Sumitomo, while ArcelorMittal also sought a greater say. In a joint venture in China with Huna Valine, ArcelorMittal has one third stake.
Differences have persisted over the royalty to ArcelorMittal as well as the price to be paid to SAIL for the raw material. The two entered into an MOU more than 2 years ago in 2015 on the possibility of a joint venture.