Mumbai, Dec. 4: Tata Steel today entered into a shipping joint venture with NYK Line of Japan to manage its logistics better given its ambitious expansion programme.
Tata Steel and Nippon Yasen Kabushiki Kaisha (NYK Line) will each hold a 50 per cent stake in the company, which will cater to dry bulk and break bulk cargo (general cargo that is not containerised).
An agreement was signed in Jamshedpur today by Hiromitsu Kuramoto, representative director and senior managing corporate officer of NYK Line, and B. Muthuraman, managing director of Tata Steel.
Tata Steel, however, did not reveal its investment in this venture.
NYK Line is one of the world’s leading transportation companies. The NYK Group operates approximately 700 major ocean vessels as well as fleets of planes, trains, and trucks.
Tata Steel had announced that it would enter into an agreement with NYK Line a few months ago. Muthuraman had then told newspersons that while NYK has its own ships, the joint venture company will own or charter ships and it plans to become an expert shipping company in future. He had pointed out that the venture will bring down the logistics and transportation costs for the company.
The joint venture comes at a time when Tata Steel has evinced interest in acquiring Corus Group Plc.
Senior Tata Steel officials have averred that the company’s interest in Corus will not affect its expansion plans in the country. Tata Steel is planning to set up three greenfield facilities in Orissa, Chhattisgarh and Jharkhand.
Chairman Ratan Tata had communicated to the company's shareholders in May this year that these facilities will have an aggregate capacity of 23 million tonnes and that the units coupled with other strategic acquisition opportunities could see the company invest Rs 70,000 crore in the next decade.
Over the next decade, Tata Steel has plans to attain global scale with output exceeding 30 million tonnes.
Analysts say given such an expansion programme, Tata Steel is clearly laying out the necessary groundwork. It has announced a 50:50 port project with Larsen & Toubro in Dhamra.
Recently, Tata Steel signed a joint venture agreement with Tata Power Company to set up captive power plants in Chhattisgarh, Orissa and Jharkhand.
This joint venture aims to meet the power and steam requirements to support the expansion plans of the company in these states.
Tata Steel will hold a 26 per cent equity in the venture with Tata Power holding 74 per cent. Under the agreement, the company will consume power generated from the power plants.
- Tata Steel and NYK Line of Japan to set up a shipping company
- Each to hold 50 per cent stake in venture
- JV will cater to dry bulk and break bulk cargo
- NYK Group operates700 major ocean vessels
- JV will own or charter ships