Tata Metaliks terminates ductile iron plant JV with Kubota

Pig iron manufacturer, Tata Metaliks has terminated its joint venture-Tata Metaliks Kubota Pipes (TMKPL) with the Japanese company Kubota Corporation, to strengthen JV’s operations, DP Deshpande, ED of Tata Metaliks told CNBC-TV18 today.

Earlier JV was jointly owned by the Indian and Japanese company. Now it will be a 100 percent subsidiary of Tata Metaliks. The company however did not disclose any details on buying Japanese company’s stake in the JV. TMKPL which manufactures ductile iron pipes came in to existence in 2007.
 
Tata Metaliks’s operation had significant impact on TMKPL’s cost structure, Deshpande explained. "We saw that the way the business was run earlier, it was losing money and needed certain amount of structural changes. We now plan to have an integrated production control system right from raw material level up to finished pipes." Pig iron is used as raw material for manufacturing pipes.

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Tata Metaliks had a discussion with Japanese partner and realised that the termination of joint venture was necessary for survival of its operations.

The new-single hand chain strategy will allow TMKPL to make significant cost savings as well. "We believe that the losses the TMKPL was running into would at least come down. We do not expect it to completely disappear. But it will be able to significantly come down primarily because of the synergies involved," Deshpande said adding that transactional cost between the two companies will also improve post termination of JV.