 "Sajjan Jindal, JSW")
Sajjan Jindal, chairman and managing director of the $11-billion JSW group, was in the headlines recently for an unlikely reason when his name got dragged into the controversy around the ‘secret meeting’ between the Indian and Pakistan prime ministers (denied by all later). Amid the noise, Jindal gave a glimpse of the group’s future to Ishita Ayan Dutt and Dev Chatterjee. Edited excerpts:
What is motivating you to expand organically and inorganically when the steel sector is in the doldrums?India is one of the few countries growing at seven per cent. If we have to leverage domestic demand and a large young population, it is imperative for India to accelerate growth. The JSW group has been looking at counter-cyclical investments, notwithstanding the current subdued economic conditions, keeping in view the long-term potential of the Indian economy.
You took over Jaypee’s hydro projects in 2015 and are in talks to take over its cement units. Won’t the JSW group fall into a debt trap with the spate of acquisitions?
The group is engaged in the core sectors viz steel, power, ports and cement. It has been evaluating opportunities in India in these verticals. The group firms are profitable in spite of the stress in those sectors. However, no acquisition or expansion will be taken up unless they are value accretive and contribute to the bottom line. I do not find any constraints in funding good acquisitions or expansions.
The Indian steel industry is reeling under cheap imports from China, Japan and South Korea. A safeguard duty and import duty hike is in place, but is it enough?
The global steel industry is plagued with huge surplus capacities owing to severe contraction in China followed by the commodity crisis. The export-dependent countries — China, Japan, South Korea and Russia — are dumping steel at unfair prices and the imports into India grew 71 per cent and 34 per cent, respectively, in 2014-15 and 2015-16 (so far). The industry welcomes the steps taken by the government in imposing provisional safeguard duty on certain grades of hot-rolled coils and increasing tariffs on steel products. The steps initiated by the government did not give relief to the industry as these countries are desperate to export steel at any price.
Even though the Indian steel industry is the second most competitive in the world, the strategy of distress exports by these countries is hurting it. Hence, the industry asked the government to initiate a package of measures to stall unfair steel imports into the country.
Are you happy with the pace of economic reforms of the Narendra Modi government?
The government has taken a slew of reforms, which are directionally on the right track. We all want to accelerate the pace of reforms, particularly in areas of land, labour and ease of doing business. It is appreciable the government is sincere in its intention to bring transformational changes for a sustainable industrial development.
Why has JSW avoided expanding abroad in an aggressive way? Do you think India Inc erred in its overseas expansion?
Many of the Indian groups have made acquisitions in the past at the top end of the valuation cycle. The global financial crisis in 2008 dramatically altered the prospects of several economies and consequently, the experience of many Indian groups, including JSW, in overseas acquisitions is not good. Simultaneously, the potential of India throws several opportunities and with a series of reforms currently being envisaged, it is prudent to focus on India rather than venturing into the overseas market. At the same time, thanks to its inherent competitive advantages, India can become a global hub for supply of manufactured products to the world in line with ‘Make in India’.
Where is the group headed in the long run? Do you see it as a dominant steel making group or is there any other venture in the group which could become equally big?
JSW Energy is more profitable than JSW Steel as on date. We continue to grow all our businesses simultaneously evaluating new-age consumption-focused ventures.
What is the future of greenfield projects in India?
Several Indian steel companies are figuring in the list of 36 world-class steel companies, which is a reflection of Indian steel industry’s competitiveness.
As India is blessed with natural resources like iron ore and coking coal and with the amendment to the Mines and Mineral Development and Regulation (Amendment) Act for allocation of mineral resources through a transparent auction process, India has the potential to create steel production capacities not only to support our growing infrastructure needs, but also to be a global supplier of steel at competitive prices. JSW Steel is currently working to enhance its capacity through its brownfield expansion first and then focus on greenfield projects to achieve its vision of 40 million tonnes a year capacity.
There are many stressed assets on the block such as Electrosteel and VISA Steel. Do they interest you? Would it make sense for JSW to enter into a strategic partnership with Essar Steel?
I do not like to comment on any specific company, but JSW Steel is an independently board-managed company and continues to evaluate various options including inorganic growth.
There are talks of JSW trying to get into Indian Premier League (IPL) after making a splash in football. What are your plans on cricket?
We’ve already clarified we’re not pursuing IPL. We are focusing on football, wrestling, squash etc.
You have denied journalist Barkha Dutt’s claims that you helped set up a meeting between Indian and Pakistan PMs. Do you have any idea how your name might have got dragged into this?
The relevant officials from both the countries have already issued a denial on this matter and I have nothing to add.
Do you have any political ambitions?
We have large plans for growth in JSW Group and I continue to focus in accelerating this growth to take the group to the next level.
Have you set any timeline to move to a non-executive role?
Having established robust core businesses, they are on auto-mode with a very competent professional management. I continue to be associated in the business as long as I enjoy this work.
