Tata Steel, NYK in 50:50 shipping JV
Close on the heels of announcing a bid to acquire UK-based steel company Corus, the country’s largest private steel firm Tata Steel Ltd on Monday signed an agreement with Japan’s Nippon Yasen Kabushiki Kaisha (NYK), one of the largest shipping companies in the world, to form a 50:50 joint venture (JV) shipping company to cater to dry bulk and break bulk cargo segment.
“The shipping operation with NYK will help the company to cut down the cost of transportation of raw materials,” company officials said, without disclosing details on the size of investments. Shipping analysts, however, opine that the JV would have to depend on short time charters for the time being, since cost of buying new vessels is ruling at an all time high. Shares of Tata Steel closed 0.02% down at Rs 468.10 on the BSE on Monday.
Nippon Yusen Kaisha (NYK) is Japan’s largest marine transportation company with operations across the world. It owns and operates around 758 vessels that provide a broad range of shipping services that include container, cruise, tramp, and specialised transport services. The company also provides logistics services through a highly integrated transportation network throughout the world.
Steel companies are increasingly exploring opportunities to tie up with shipping companies to lower transportation costs. Arcelor Mittal is said to be in an advanced stage of talks with Shipping Corporation of India (SCI) to form a 50:50 India based JV. A memorandum of understanding (MoU) is likely to be signed soon, according to media reports. The estimates of volumes to be transported through this JV include about 175-180 million tonne of iron ore, 75-80 million tonnes of coking coal and substantial volumes of steel products.
The diversified conglomerate Larsen & Toubro (L&T) had also announced its plans to invest Rs 2,000 crore ($446 million) to set up a shipyard with the capacity to build high-value ships. The company is looking for land in the coastal states of Tamil Nadu, Andhra Pradesh, Maharashtra and Gujarat for the purpose.
