Copyright FOURIN, Inc. 2023
India’s Steel Industry: ArcelorMittal and Nippon Steel Acquire Essar, Aichi Steel Invests in Vardhman
In India, automobile steel manufacturers are actively carrying out M&As and capital tie-ups in recent years. In 2019, India’s crude steel production stood at 111.24 million tons, the second largest in the world after China for the second consecutive year. The scale of India’s steel industry is expected to continue growing, with the government having a long-term plan to increase crude steel production capacity to 300 million tons by 2030. In anticipation of this growth potential, ArcelorMittal and Nippon Steel jointly acquired India’s Essar Steel at the end of 2019. Furthermore, the industry’s restructuring is underway with the establishment of new partnerships in the special steel sector.
India: Recent Trends of the Steel Industry
Crude steel production・India’s crude steel production increased 1.8% year-on-year to 111.24 million tons in 2019. For the second consecutive year, it ranked second in the world after China. ・As for steel demand in 2020, the Indian Steel Association (ISA) predicts (as of April 2020) that it will fall by 7.7% to 93.7 million tons.
M&A and alliances・In 2018 and 2019, M&As involving Indian steel makers increased. – In June 2017, five steel manufacturers, Bhushan Power & Steel (BPSL), Bhushan Steel (BSL), Electrosteel Steels, Essar Steel and Monnet Ispat & Energy, were designated as companies subject to the bankruptcy law. In response to this, the five companies began business restructuring procedures by selling assets, while Indian and foreign companies began to acquire these firms. – The M&A of four companies has been already completed while that of BPSL is under negotiation. (Created using WSA’s documents, company PR materials, media and other sources)
In June 2017, five steel manufacturers, Bhushan Power & Steel (BPSL), Bhushan Steel (BSL), Electrosteel Steels, Essar Steel and Monnet Ispat & Energy, were designated as companies subject to the bankruptcy law. In response to this, the five companies began business restructuring procedures by selling assets, while Indian and foreign companies began to acquire these firms. Out of the five companies, the acquisition of Bhushan Steel (BSL), Electrosteel Steels and Monnet Ispat & Energy was confirmed in 2018. Following this, in December 2019, Indian authorities approved the joint acquisition of Essar Steel by ArcelorMittal and Nippon Steel. As a result, Essar Steel’s was changed to ArcelorMittal Nippon Steel India (AM/NS India). The two parent companies will operate the business under an equal partnership.
Regarding the special steel sector, Aichi Steel announced in August 2019 that it will invest in a local special steel maker, Vardhman Special Steels. Aichi Steel has been providing technical support for special steel manufacturing to another steel manufacturer Usha Martin in India before, but Usha Martin sold its steel business including its special steel division to Tata Steel in April 2019. In response to this, Aichi Steel started a new partnership with Vardhman. In the future, Vardhman aims to supply steel products to Aichi Steel’s manufacturing bases in ASEAN.