Nippon Steel Corp, the world’s fourth largest steelmaker, says it intends to raise its stake in Tatt Giap Group Bhd subsidiary Nippon EGalv Steel Sdn Bhd, which manufactures electro-galvanised steel.
According to a Reuters report yesterday, Nippon Steel planned to increase its stake in Nippon EGalv to 50.1% from 10% for US$6.5 million (RM19.7 million) by end-June.
Nippon Steel was quoted saying that it planned to make Nippon EGalv its subsidiary to boost the supply of electro-galvanised steel sheet to Japanese electronics makers in Malaysia, given that its South Korean rival, the Pohang Iron and Steel Company (Posco) was also tapping into the market.
“We’ll better compete with rivals by making the Malaysian steelmaker our group company,” Nippon Steel marketing and strategy head Hideki Ogawa was quoted as saying.
Nippon Steel revealed that it would start producing 100,000 tonnes of fingerprint-free electro-galvanised steel sheet annually, to be used in flat-screen TV and audio products manufacturing in Malaysia.
Nippon EGalv was incorporated in 2008. In 2009, two Japanese companies, Nippon Steel and Hanwa Co Ltd, bought 10% and 15% equity interest in Nippon EGalv respectively. Tatt Giap holds a 67.2% stake in the unit after the share sale.
According to Reuters, competition for high-end sheet steel is increasing in Malaysia as Japanese manufacturers such as Sony, Panasonic and Pioneer boosted output, while Posco was also starting production of electro-galvanised steel sheet to supply to locally operating Japanese and Korean consumer electronics manufacturers.
Currently, the domestic annual demand for 200,000 tonnes of fingerprint-free electro-galvanised steel sheets is met fully by imports.
Tatt Giap, which manufactures steel pipes and bars, floated its shares on Bursa Malaysia less than a year ago.
The group partnered with Nippon Metal Industry in 1997 to form Nippon Metal Services (M) Sdn Bhd to undertake stainless steel surface polishing and treatment.
For 4QFY10 ended Dec 31, the group made a net profit of RM981,000 while revenue was RM74.8 million. However, the group was loss-making for FY10 Dec 31, incurring a net loss of RM1.25 million or 1.86 sen per share. Annual revenue came in at RM315 million. - The Edge Daily