Japan's Sanyo Special Steel and Mitsui, majors in speciality steels and steel trading, respectively, have together invested Rs218 crore to buy 49 per cent stake in a new joint venture floated by Mahindra Ugine Steel Co (MUSCO).

The allotment of shares has been completed on Thursday against cash infusion by Sanyo of approximately Rs129 crore for their stake of 29 pet cent while Mitsui paid approximately Rs89 crore for their 20 per cent stake in Navyug Steel. MUSCO holds the balance 51 per cent of equity in the JV.

As part of the arrangement, Sanyo will offer technical support and Mitsui marketing assistance to the speciality steel joint venture, which will be called Mahindra Sanyo Special Steel Pvt Ltd (MSSSPL).

The Mahindra Group is also looking to extend its relationship with Mitsui and talks are currently on to see if it can be extended to auto components or aerospace, say reports.

The board of directors of MUSCO announced the financial closure of the 51:49 joint venture on Thursday.

This is likely to be the first step towards a larger alliance involving Mitsui and Mahindra Systech, the holding firm for the slew of 16 component businesses in Mahindra & Mahindra Group.

MUSCO had, in November 2011, approved the slump sale of its steel business into its 100 per cent owned subsidiary, Navyug Special Steel Private Limited (Navyug Steel). MUSCO completed the share allotment following the board meeting of Navyug Steel.

With financial, technical and operational inputs from Sanyo Special Steel Co Ltd and Mitsui & Co Ltd, the JV expects to enhance both its current production from the existing level of 120,000 tonnes per annum, the value it adds to the steel and therefore the special applications, which the JV can now address.

''The Mahindra Group welcomes this JV which will create a strong value proposition and enable MUSCO to leverage Sanyo's technical expertise and Mitsui's international footprint. This new venture will help the company to emerge as one of the most profitable, high quality speciality steel producers in the coming years,'' said Anand Mahindra, chairman and managing director, Mahindra Group.

''Sanyo is looking forward to working with Mahindra & Mahindra, Mitsui & Co, and all the people of India to make this project a successful one. We consider the future of the special steel market in India to be bright and are happy to be given a chance to make our contribution toward the project.'' said Y Takeda, president and representative director, Sanyo Special Steel Co Ltd.

''This joint venture is indeed a testament to our longstanding partnership with Mahindra & Mahindra Ltd and Sanyo Special Steel Co Ltd, which has been built through broadening cooperation and converging synergies. It also reflects our confidence in the Indian market where we believe the ongoing transformation presents real growth opportunities, said M Takahashi, executive managing officer, Iron & Steel Products Business Unit, Mitsui & Co Ltd.

''Over the last 18 months that we have had the pleasure of working with Mitsui and Sanyo, we have developed a common vision of the future of our joint venture that leverages the strengths of all three partners and the opportunity to move up the value chain while addressing the growing needs of the Indian market for Speciality Steels,'' said Hemant Luthra, chairman, Mahindra Sanyo Special Steels Private Limited.

The joint venture will be run by a dedicated team drawn from Sanyo (manufacturing), Mitsui (marketing) and Musco which will provide the general management skills to support the growth of the new JV.

The joint venture is expected to deliver its goal of operational excellence, improved productivity and enhancement of both cost and quality to international standards to enable it to achieve its full business potential, the release added.