As part of the arrangement between the two partners, the alloy manufacturing facility of Kalyani Steels has been hived off into a separate company--Kalyani Carpenter Special Steels.

While the Kalyani group will hold 74 per cent in the company, the US-based partner will hold the remaining 26 per cent. The Carpenter group's total investment in the manufacturing company will be around $10 million.

The partners will also float a second company--Kalyani Carpenter Metal Centres--for distribution of special steel products both in the domestic and export markets.

Carpenter will hold a majority 51 per cent in the venture while the remaining 49 per cent stake will be with the Kalyani group. The special steels joint venture company will beupgraded and additional finishing facilities installed to produce stainless, tool and valve steel.

The two partners are expected to invest around $25 million in the new facility in a phased manner over the next few years. The US major will also transfer technology to the venture in exchange for royalties. Production is expected to begin in June.

For the distribution venture, an office has already been set up in March, and over the next few years, the partners plan to establish distribution service centres in major steel consuming areas of the country. The Carpenter group has already appointed an expatriate as managing director of the venture.

By establishing the joint venture, Carpenter expects to serve both the local and world markets in a more cost-efficient manner through exports from its facilities in the US.

As part of its growth strategy for Asia, Carpenter has opened offices in Singapore and Taiwan. Speciality steels made by the local joint venture will be exported through Carpenter'sdistribution companies world-wide.

Kalyani Steels, which had grossed a turnover of Rs 188 crore in 1997-98, produces alloy steel for most of the leading-forging companies in the country and for other customers in the automotive, electronics and engineering sectors.