Tata Steel will have a tenuous attachment with Mittal Steel through its technical agreement with Arcelor.
T Mukherjee, deputy managing director Tata Steel, said, the agreement with Arcelor stands. The agreement pertains to coated sheets for automobiles.
"The technological agreement with Arcelor, to the best of our understanding, will be transferred to the new merged entity," he said.
The pact with Arcelor will last another five years. The contours of the arrangement extends to marketing of extragal, a special quality automotive steel, with Arcelor proprietary technology in markets where Arcelor has a stronghold. Tata Steel exports around 30,000 tonne extragal to Europe.
Mukherjee further said all commitments made by Arcelor would be honoured. Tata Steel can produce around 3,00,000 tonne of extragal. However, the extragal market in India is yet to pick up.
The auto sector is important to Tata Steel since the company is reorienting its product mix to move up the value chain. The company's cold rolled (auto) market share increased from 35 per cent in 2005 to 37 per cent in 2006 while supplies to the auto sector increased from 6,15,000 tonne to 6,64,000 tonne.
The agreement with Arcelor was signed in 2002. The automotive steel technology co-operation agreement was signed between Nippon Steel Corporation of Japan, Arcelor and Tata Steel.
As per the agreement, the companies work jointly on technical developments, to meet the needs of the Indian automotive steel market and was aimed at providing the Indian automotive industry with effective total steel solutions.
The subjects covered in the agreement include joint activities required for a wider acceptance of high tensile and galvanised steel sheets amongst the automotive customers in India keeping the requirements of safety, environment, and car weight.
The tripartite agreement happened at a time when strategic alliances were taking place in the steel industry at global level.
The companies felt that there were increasing consolidation and alliances happening in the global automotive industry and in order to serve the needs of the industry, it was necessary that steel companies also come together in strategic alliances.
It was for the first time an Indian company had entered into a strategic alliance with two of the leading producers of automotive steel in the world.
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