JSW Steel's vice-chairman and managing director, Sajjan Jindal, spoke to Shubhashish and discussed the synergies that JSW Steel will derive from this stake buy in Ispat. Edited excerpts:
What kind of synergies will JSW see for itself from this deal?
We will get technology from them. Ispat won't supply steel in South India and we will cater to that market completely. So, there will be lot of synergies and JSW will benefit because JSW will become a company which controls 14 million tonnes steel capacity. That itself is a huge positive for JSW Steel.
By when do you think JSW will get a full return on its investment?
I think it will take about three years before we start looking at benefits of this investment.
Wouldn’t JSW want JSW Ispat to be fully owned by JSW Steel?
It is the best option. The existing promoters must agree to that. If that happens, then we will get the benefits of the losses in Ispat. But, this is up to the promoters of Ispat to decide.
Results of Ispat Industries will now be consolidated with JSW Steel, so how will the profitability of Ispat be shared with JSW?
Profits will remain in Ispat and if we earn, then that will happen through dividends. Money in JSW from Ispat will flow only through dividends.
JSW has a downstream facility in Vasind and Tarapur. Will Ispat supply steel to those plants?
Yes, now we don’t have to supply steel to our facilities in Vasind and Tarapur, the Ispat plant will do that. Similarly, JSW's Vijayanagar plant will supply steel to Ispat's downstream facility in Kamleshwar. With this, JSW will save at least Rs 1,000 per tonne on galvanised and colour-coated steel.