Tisco scouts for European mills
on the block

KOLKATA: Taking cue from biggies in international steel business like LNM Group and US Steel, Tata Iron & Steel Company (Tisco) too is scouting central and east European countries to pick up steel mills that may be up for privatisation.

State-controlled steel making capacities in countries like Czech Republic, Poland, Romania, Ukraine, Slovakia or Serbia are being slowly privatised. Few like the Lakshmi N Mittal controlled LNM Group, US Steel and the Corus group, have jumped into the privatisation spree to pick up steel mills. Some more mills in central and east Europe are on the privatisation anvil.

Top sources in Tisco told ET, that scope of consolidation of steel business in domestic market through the acquisition route is still a distant reality. This has prompted Tisco to start looking at some serious take-over options in central and east European countries.

A select top level group in Tisco with key board members have been formed to evaluate various options. Tisco’s official spokesperson, however, did not comment when contacted by ET, neither did he disclose any target country or particular steel mill.

Constant modernisation and capacity addition has seen Tisco capacity move up from just a 2 million tonne steel company in the early nineties to current levels of 4 million tonnes. It is now implementing another one million tonne capacity addition at Jamshedpur at an investment of Rs 1,700 crore.

Tisco has also been ranked as the lowest cost steel maker in the world and the third best steel company in the world by World Steel Dynamics. However, in terms of size, Tisco, the second largest steel company in the country, is still a small player with about 14-15 % domestic market share.

World’s top two steel groups — Arcelor and the LNM group produces about 44 and 35 million tonnes each respectively. The Lakshmi N Mittal-controlled LNM Group seized privatisation opportunities to buy out Sidex in Romania and the 8 million tonne Nova Hut in Czech Republic to become the world’s second largest steel maker.

Last month, the LNM Group won the exclusivity right, pipping US Steel, to start final talks to takeover Polskie Huty Stali, a group of Polish steel plants with over 6 million tonnes of capacity. The LNM Group, also shopped in other parts of the world too like buying out Annaba in Algeria and picking up about 47 % stake in ISCOR, South Africa.

US Steel’s wholly owned subsidiary, US Steel Balkan, also recently bid for a Serbian steel mill - Sartid a.d. along with its six subsidiaries with a capacity of 2.4 million tonne.

While many of the steel mills in central and east Europe are state-controlled, complex shareholding pattern with strategic holdings by local business houses or public holdings as a high 60% have led to de-railment of many privatisation moves in these countries. In one such case LNM Group was successful in its cash offer to buy OSINEK’s holding in Vitkovic Steel.

SUMAN DAS SARMA
TIMES NEWS NETWORK[ WEDNESDAY, AUGUST 06, 2003 02:25:25 AM ]