Steel Authority of India is exploring options to tie up with a Japanese or Korean steelmaker to make auto grade steel in India.

The move follows the collapse of tentative discussions with Laxmi Mittal’s ArcelorMittal for a joint venture. Mittal chose to acquire Essar Steel and that effectively scuppered any deal, outgoing SAIL chairman Anil Kumar Chaudhary said in an interview with PTI.

In December 2019, ArcelorMittal announced that it had completed the acquisition of Essar Steel and formed a 60:40 joint venture with Nippon Steel (AM/NS India) to own and operate the debt-ridden firm. The deck for acquisition of Essar Steel for Rs 42,000 crore by L N Mittal-led company was cleared by the Supreme Court.

Chaudhary said two separate delegations of Indian Steel PSUs led by the ministry of steel visited Japan and South Korea for deliberations with the steel firms in these countries for further expansion and probable areas of technological collaboration towards the manufacturing of high grade steel including steel for auto-body sheets.

The SAIL chairman, who retires on December 31, said he expects the state-owned steelmaker to trim its debt to Rs 40,000 crore by the end of this fiscal from Rs 50,638 crore at the end of Sept 2020.

The government has included speciality steel as part of the productivity linked incentive scheme to boost its production in the country and reduce import. The finance ministry has allocated Rs 6,322 crore for this segment of the steel industry.

Auto industry sources said the multinational players prefer to source speciality steel from companies of their own countries.

The industry continues to rely on imports as local steel companies do not manufacture the steel grade they needed. Another risk involved is that if the import of steel (raw material) is restricted into the country, the industry may go for import of the components itself which may affect the government initiative of “Make in India”.

When asked for his comments on the rising prices, the SAIL chief said ”domestic steel prices are guided by international steel prices. In the past, the steel prices had really touched the low and it was indeed a tough time for the domestic steel industry. Any industry follows its own dynamics confirming to the market situations and it operates accordingly".