DOOR TO GROWTH

Calcutta, Nov. 13: The operations of the joint venture (JV) company of Tata Steel and Bluescope will expand beyond India.

The 50:50 joint venture will not only set up a plant at Jamshedpur and three other units at Pune, Chennai and New Delhi, but will also take over Bluescope’s present operations in Sri Lanka.

The unit, Bluescope Lysaght Lankan Pvt Ltd, is a wholly owned subsidiary of Bluescope Steel, Australia.

When the company becomes a part of the JV, Tata Steel will acquire 50 per cent in it. A Bluescope Lysaght spokesperson said the consideration was yet to be worked out.

“It is still not known how much Tata Steel would have to pay. The details are being worked out,” the spokesperson added.

The Lankan unit was set up 10 years ago. It is a strong player in walling and steel-building products.

The move to merge this company with the JV is part of the larger gameplan of Tata Steel and Bluescope. This JV is being formed to cater to the entire Saarc region with prime focus on India.

Therefore, if the JV integrates the Sri Lankan business, it will maximise the operational and organisational synergies.

The merger will benefit the Sri Lankan unit in many ways.

For instance, it will start importing the basic raw material ? trademark Bluescope products like ‘Colorbond’ and ‘Zincalume’ ? from India, instead of Malaysia and Australia.

The company sells close to 4,000 tonnes a year and it is yet to maximise the production capacity. The annual turnover of Bluescope Lysaght is about $6 million.

Even as the steel market is minuscule in the island country when compared with India, there has been a steady growth there.

Six new roll forming companies have set up shop in Sri Lanka in the recent past but Bluescope Lysaght has a niche for superior products.

Back home, the JV will try to exploit the locational advantage to cater to different markets. The coating plant will come up in Jamshedpur with an investment of Rs 900 crore.

Jamshedpur would produce ‘Colorbond’ and ‘Zincalume’ coated steel. This will be made into finished products in three locations in Pune, Chennai and New Delhi.

The Lysaght range of steel-building products could be manufactured either in Pune or New Delhi.

“The idea is to offer the entire range of our products, including the Butler brand of pre-engineered buildings to customers of Saarc countries,” a Bluescope Steel official said.