The much delayed plans of the country's largest steel maker SAIL to set up a Rs 5,000-crore joint venture with ArcelorMittal seem to be coming to fruition. All hurdles in the formation of a joint venture (JV) between the steel giants have been removed and a final agreement in this regard may be signed next month, Union Steel Minister Chaudhury Birendra Singh said on Sunday.
"A feasibility report on the new JV has been prepared and all pre-requisites formalities have been achieved. The final draft of the agreement is ready and it may be signed as early as next month," Singh told IANS in an email interview.
As per an earlier Economic Times report which quoted an official speaking on the issue, both companies had differences on certain points under the Memorandum of Understanding, and so, it was decided to extend it for another three months from the deadline of May 31, 2017.
SAIL had even sought help from government thinktank NITI Aayog to resolve differences with ArcelorMittal over setting up of the Rs 5,000-crore autograde steel plant.
Besides addressing the automotive sector, the much-awaited JV will focus on producing specialised grade steel products for defence, space and automobiles. It will also provide specialised steel technologies to SAIL, minister Birendra Singh said.
More than two years ago, both the steel majors entered into a pact to explore the possibility to set up a Rs 5,000-crore JV to produce automotive steel. However, financial negotiations delayed the formation of the proposed project.
In May last year, an inter-ministerial group (IMG) had reviewed the progress of MoU.
The proposed JV will construct a cold rolling mill and other downstream finishing facilities in India, touted as one of the fastest growing automotive markets in the world with production expected to double between 2014 and 2020, from 3.6 million units to 7.3 million units.
In an investor presentation in June 2015, ArcelorMittal had said the proposed steel plant will come up at a major auto cluster in India.
On the steel sector's debt burden, Singh told IANS that remedial measures like imposition of anti-dumping duty, coupled with various RBI schemes have helped restructure some of the industry's stressed loans. "Various trade remedial measures, like anti-dumping, safeguard measures, coupled with RBI schemes to restructure outstanding debts (have helped)," he said.
"These steps have helped improve the price realisations of the steel companies and are addressing the issue of NPAs of the steel sector gradually," he added.
Consumption-wise, Singh observed that the government's monetary and policy push to develop the infrastructure sector will raise the overall steel usage in the country.
Singh's optimism stems from the fact that a massive Rs 4 lakh crore has been allocated for infra creation for sectors such as railways, shipping and national highways in the Union Budget 2017-18.
In the last fiscal, the total finished steel consumption in the country rose by three per cent to 83.93 million tonnes in the last fiscal from 81.52 mt in 2015-16.