It's a win-win situation

The JV between Steel Authority of India (SAIL) and Jaiprakash Associates (JAL), is a win-win situation for both the companies.

While former will be able to monetise its blast furnace slag-waste generated during steel manufacturing, the latter will get ready access to a raw material, which is not available in sufficient quantity in India. Slag is blended with clinker to produce slag cement, which attracts premium in the market as it is considered to be best for high strength construction such as roofing.

Besides providing SAIL with an incremental source of revenue, the minority interest in the JV will be an asset for the company and help in strengthening its balance sheet. Cash outflow for SAIL wouldn’t be significant given the minority stake and high level of leverage used to fund cement projects

For Jaiprakash, the deal would augment its leadership position in central and north India, besides increasing market share. The company already has a huge manufacturing set-up in Satna, so evacuation of the finished product won’t be a challenge either. The Bhilai unit will have the added advantage of being close to the source of raw material (slag).