POSCO, SAIL form joint working group

KOLKATA: South Korean steel major POSCO and Steel Authority of India Ltd (SAIL) have formed a joint working group to give a concrete shape to their recently announced alliance. Apart from sharing of best practices, the alliance signed between the two last month, could open up the possibility of POSCO using SAIL's vast marketing network through use of the latter's stockyards across the country.

"We have formed a working group which will have four members each from SAIL and POSCO to look into various areas in which the two companies can form alliances," Mr S K Roongta, chairman SAIL said. POSCO is investing Rs 52,000 crore - the largest FDI received so far to build a 12 million tonne steel plant in Orissa. He was speaking to reporters on the sidelines of the 34th national management convention organised by AIMA.

The alliance indicates some broad areas of collaboration where the two companies can harness synergies in terms of sharing people and processes. There would be exchange of engineers, technicians and other professionals. Subject to further discussions, both companies would also cooperate in joint R&D and other mutually-agreed projects.

Information sharing, ERP, Six Sigma are some of the areas we could collaborate, he added. For POSCO in particular, which is setting up shop in India, it will gain access to SAIL's large domestic network and resource base. Mr Roongta said the alliance would involve exchange of resources along with joint marketing, warehouses and service centres in India and overseas.

Significantly, it could offer POSCO access to SAIL's stockyards across the country. Nodal stockyards provide SAIL an immense reach to its customers. However, separate agreements would have to be signed between the two in case the two decided on this issue. Similarly SAIL could also benefit from the South Korean firm's global presence.

Roongta also said SAIL has decided in principle to revive Kulti Works in Burdwan and a plan is currently being put in place on this. The Kulti Works has some foundries and engineering shops that can be put to use, Mr Roongta said, though he refused to mention the amount of investment that would be required. He also reiterated SAIL is keen to use Chiria reserves for its own expansion and is not willing to share it with any other steel major.