JSW Steel and Severfield Structures form JV for steel structurals

JSW Steel, India’s third largest steel-maker, will make steel structurals in a joint venture with Severfield Structures. JSW Severfield Structures will be a 50:50 JV, with JSW’s investment being routed through a subsidiary, JSW Building Systems. The JV will spend ₤30mn pounds or Rs 220 crore to set up a plant that will fabricate 35,000 tonnes of structural steel.

The equity investment is 33%, so both companies will invest Rs 37 crore each, and the remaining Rs 146 crore will be raised through debt. The JV’s sales, at full capacity, are estimated at Rs 400 crore, and will use steel plates and galvanised steel from JSW Steel to design, produce and erect steel structurals. The main market will be India and initial sales are expected in 2011. Steel structurals reduce the lead time for construction of buildings and in infrastructure projects, and are well accepted in developed markets.

JSW claims that Indian companies are resorting to using more of structural steel in construction, to save on time, improve aesthetics and are durable too. It claims that a high-rise tower can be built in less than half the time take using concrete, using structural steel. Severfield-Reeve Structures is the largest subsidiary of Severfield-Rowen, a market leader for structural steel in UK and Europe. Its capacity is nearly half of the group’s average weekly fabricated steel capacity of 3,450 tonnes. The group turnover was ₤350mn in 2007.

In the first half ended June 30, 2008, Severfield-Rowen’s sales grew 26% to ₤173 pounds due to a strong order book. Its venture into India is in line with its stated objective of exploring new growth opportunities abroad. JSW Steel’s revenues during 2007-08 were Rs 11,420 crore and in the six months ended September 2008, its sales rose by 56% to 7,940 crore.

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