Welspun-Gujarat Stahl in 40:60 JV with US-based Lone Star

New Delhi, Dec 21 (UNI) Welspun-Gujarat Stahl Rohren Ltd has entered into a 40:60 joint venture with US-based Lone Star Technologies Inc to pump Rs 300 crore to manufacture spiral in welded tubular products for oil and gas applications in North America.

Under the agreement, the 1.4 billion dollar Lone Star and Welspun Pipe Inc, a 100 per cent subsidiary of the company, will form a new company -- Welspun Lone Star Tubulars LLC.

The JV will be funded in equity and debt, a statement said.

As per the deal, Welspun Lone Star Tubulars will establish a new manufacturing facility capable of producing 3,00,000 net tonnes of spiral welded pipes in a range of 24" to 60".

The new facility to be located in the South West of the US is expected to come online by early March 2008.

''We look forward to building upon our existing relationship with Lone Star through the formation of this Joint Venture,'' said Mr B K Goenka, the company's Vice Chairman and Managing Director, This partnership will allow Welspun to provide a wide array of products for onshore and offshore line pipe requirements to the customers.

The company has its presence in the US as it manufactures pipes for the laying of the world's deepest pipeline in the Gulf of Mexico, he said.

''The JV company will enable us to strengthen that presence in the fast-growing US market, where demand for spiral pipe continues to increase.'' With an expanded product line into spiral weld line pipe, this will provide the JV with an entry point into a new market of large diameter line pipe.

The Board of Directors of the company has approved the joint venture agreement for setting up the Spiral Welded Pipe Mill, which will allow the new company to expand its capability to serve the fast-growing North American large diameter line pipe industry.

The transaction is expected to be accretive to both the company and Lone Star's EPS in 2008-09, the company stated.

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