Tata Steel and Nippon Steel may extend relationship
According to newspaper reports, Nippon Steel Corporation has expressed its desire to extend its relationship with Tata Iron and Steel (Tisco) to areas including marketing and development. It currently has a knowledge tie up with Tisco for the latter's cold rolling mill (CR mill) venture.
Tisco (FY99 Net Sales Rs 62,746 m), a part of the Tata Group, is India's largest integrated private sector steel producer.
The current partnership between Tisco and Nippon Steel is scheduled to end once the CR mill reached the ramp up stage.
An extension of the partnership between the two would be mutually beneficial. While Nippon Steel would benefit from Tisco's insight into the Indian steel markets, Tisco would get access to world class technology and inputs from an internationally experienced management.
One prime concern from such a relationship is that Tisco would ineffect be giving a back door entry into the domestic markets to a potential competitor. Furthermore, as Tisco looks at expanding its presence in the international markets there would be conflicts of interest.
Tisco needs to evaluate the deal in great depth to ensure that it does not lose its competitive edge in the domestic markets by sharing marketing related information. It, however, surely stands to benefit from the technical and managerial inputs that Nippon Steel will bring as part of the deal.
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