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Mahindra Ugine Steel Company (Musco) has decided to hive off its alloy steel division into a 50:50 joint venture with Sidenor of Spain. Musco has already hived off the alloy steel division into separate company in which both the partners will hold equal stakes.

Sources said that the two parties will meet in September for the last time and an agreement will be signed then. Musco has two divisions in which one is for alloy steel and the other for stamping.

Musco's alloy steel unit has a capacity of 6000 tonne per month and the company's order book position stands at 6500-7000 tonne. The company is planning to raise the capacity to nearly 8000 tonne.

 

In a related development, Musco is in talks with Ashok Leyland for setting up a stamping unit at Hosur, Karnataka, specially dedicated to meet the latter's needs.

The company is also planning to set up a second stamping unit in Nashik (besides the one at Kanhe, near Pune) which would help the company to double its capacity from its existing levels.

The company also hopes to come out of the red in the current fiscal. For year ended March 31, 1999, the company recorded a loss of Rs 29 crore on a turnover of Rs 236 crore. This is against a loss of Rs 17 crore in the previous year.

The company is also planning to add new capacities at the continuos casting stream, which will take up the production capacity to 4000-5000 tonne per month from the existing 3000 tonne.

The move to shift to continuos casting route is expected to bring about synergies between Musco and Mahindra & Mahindra, which is the promoter of the company with a 49 per cent stake. This apart, financial institutions hold 28 per cent stake, while close to 13 per cent is held by the public.

Sidenor is one of the leading alloy steel producers globally with an annual capacity of 7,00,000 tonne, while Musco has a total installed capacity of 75,000-80,000 tonne.

Musco's annual production is in the region of 60,000 tonne of which 80 per cent consists of alloy steel and 20 per cent carbon steel.

Musco's client-list includes Mercedes Benz and Department of Defence Production of Supplies under the ministry of defence for MIG aircrafts.

Aloy and special steel producers are facing rough weather and many small units have closed down.