According to a source privy to developments, talks between the two companies are in the ‘final stages’. The deadline for closing the deal ended in May this year.
“Discussions are going on where the plant should be set up. There are three options – Andhra Pradesh, Maharashtra and Gujarat. Besides, commercial terms and conditions are being worked out. The discussions are at final stage and the deal is likely to be signed soon,” said the source.
The two companies had signed an MoU in May 2015 for setting up an state-of-the-art automotive steel manufacturing facility under a JV arrangement in India with an estimated cost of Rs 5,000 crore. However, financial negotiations delayed the formation of the proposed project.
Sources said a feasibility report on the new joint venture has been prepared by the Joint Working Group (JWG) and all the pre-requisite formalities have been achieved. The final draft of the agreement is ready, they added.
It is believed that the JV will not only support the booming automobile sector in the country but also provide specialized technologies to SAIL. It has been agreed that the hot-rolled input products for the JV will be supplied by SAIL’s new hot strip mill in Rourkela, Odisha, thus making the entire value chain indigenous, on the lines of Prime Minister Narendra Modi’s vision of ‘Make in India’. However, no decision has been taken as to where the JV would be set up.
This is to be noted that SAIL recently entered into a strategic agreement with Posco for wide ranging technical services for SAIL’s IISCO Steel Plant (ISP) at Burnpur to assist in realizing the benefits from its new and state of the art plant. The plant, which has already completed its modernization and expansion, is ramping up production from its new facilities and its wire rod mill will soon start producing world class wire rods in special grades to meet both domestic and international requirements, said a SAIL official.
Under the agreement, Posco will provide technical supervising service including its know-how relating to operation and maintenance of coke-making, iron and steel making and wire rod mills. The agreement will pave the way for sharing of best practices in the area of technology and maintenance which will benefit the Burnpur plant.