In a strategic move to streamline its Indian operations, POSCO Group, the global steel giant, has initiated a significant intra-group restructuring by acquiring the entire shareholding of LX International Corporation in POSCO-India Pune Processing Center Private Limited (IPPC). The acquisition will be executed by POSCO-India Processing Center Private Limited (PIPC), a subsidiary of POSCO Holdings Inc.

The deal, which has been submitted to the Competition Commission of India (CCI) for approval, aims to consolidate the group’s control over its steel processing and distribution network in India. Both PIPC and IPPC are involved in processing and distributing value-added steel products, including hot-rolled coils, cold-rolled coils, galvanised steel, and specialty steel products.

Market impact

According to the filing, the transaction represents an intra-group realignment with no anticipated impact on market concentration or competitive dynamics. While the parties have identified several overlapping markets for steel processing and distribution, the transaction is not expected to result in any appreciable adverse effects on competition. The exiting seller, LX International Corporation, is an unrelated entity, ensuring a clean transfer within the group.

Strategic objectives

The proposed deal underscores POSCO Group’s commitment to enhancing operational efficiency and market competitiveness in India, a key market for the steel industry. By consolidating its operations, the group aims to solidify its position in the country’s expanding infrastructure and manufacturing sectors.

CCI’s review

The CCI, responsible for ensuring fair competition, will now determine whether to approve, block, or impose conditions on the deal. Given the intra-group nature of the transaction and the absence of any adverse competition concerns mentioned in the filing, industry analysts expect a smooth approval process.

The acquisition comes at a time when India’s steel demand is expected to grow significantly, driven by government initiatives such as Make in India and expanding infrastructure development. POSCO Group’s restructuring aims to better position the company to meet this rising demand and strengthen its leadership in the value-added steel segment.

Industry implications

Market experts believe that POSCO’s move aligns with broader industry trends of consolidation and specialisation, as companies seek to optimise their supply chains and adapt to evolving market conditions. “Such realignments enable companies to leverage synergies within the group and enhance operational efficiency,” said a leading steel industry analyst.

The CCI’s decision on the matter will set a precedent for future intra-group transactions in India, particularly in sectors involving complex supply chains and overlapping markets, economy watchers said.

Published on December 26, 2024