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Automotive Monitor Worldwide
July 15, 2017 Saturday
277 words
SAIL, ArcelorMittal to ink pact; to set up automotive steel plant in Gujarat

This deal had been in the works for the past 2 years. Sources tell ET NOW that ArcelorMittal and SAIL would sign on the dotted line next week, sealing the long-awaited joint venture. ArcelorMittal and SAIL inked a pact in May 2015 to explore the possibility of setting up an automotive steel manufacturing unit under a JV arrangement.

According to sources, the proposed JV will see a plant set up in Gujarat and all inputs will be sourced from SAIL.

Analysts estimate India will become the world`s third-largest automobile manufacturing nation by 2026 and the proposed JV will see the production of technologically advanced steel products for the countrys rapidly growing automotive sector.

The `Maharatna` firm does not produce automotive steel and the JV will help it expand its product portfolio, with business worth Rs 6300 crore expected for the plant per year. The deal now awaits the final sign-off from the Prime Minister`s office.

ET NOW learns that one of the key agreements of the deal is to grant ArcelorMittal the right of first refusal for Salem Steel Plant (Govt of India has approved the outright sale of SAIL`s three Special steel units (SSUs) including Salem and Alloy steel plants). Under the JV terms, once the deal is signed, ArcerlorMittal has 180 days to make a bid for the Salem Asset (EV of Rs 5000 crore) which is also garnering interest from Japan`s Nippon Steel.

SBI Capital Securities is the advisor to the deal.

Tasked by the PMO, Niti Aayog is driving the intelligence behind the deal at a time when the Government of India is looking to collect Rs 72,500 crore via minority sales and strategic stake sales in PSUs. 2017 Global Data Point.
July 15, 2017
      
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