Sajjan Jindal, chairman of the $12-billion JSW Group, talks to Pavan Lall on how he sees JSW Steel’s future and the possibility of his company not being the number one steelmaker and why he simply refuses to go in for acquisitions at any price in the ongoing bankruptcy proceedings.
JSW Steel will lose its position as India’s largest steel maker after the Tatas win the bid for Bhushan Steel, one of the biggest assets in the bankruptcy process. Your comment.
We have never worked on the proposition that we want to be number one, number two or number three. For us the driving factor has been growth, maintaining the integrity of our balance sheet, meeting demand, and international exports. Steel is a global game and every facility of ours is on that scale. So, Vijaynagar is a 12 million tonne per annum (mtpa) plant, while Dolvi, which is at 5 mtpa plant, will soon go to 10 mtpa.
So you’re not bothered if JSW Steel becomes number two after the auctions are over?
It certainly doesn’t bother me if we are number two but we won’t be number two because we will become number one again. It is an interesting battle that we have stayed on top of, and it’s exciting because it keeps us on our toes, and that’s good. Tata has the desire to grab top slot and to think that they can buy companies... that may be one way of looking at it, but there’s so much more that has to also play out. Integration, execution and so on…
Where do you draw the line when it comes to making acquisitions in pursuit of growth?
You can’t make acquisitions at any price because ultimately you have to also make the money to pay back the loans. That’s why we haven’t succeeded in most acquisitions, which is fine. We bid aggressively but others bid even more aggressively than us, which again is okay. So, if we can build capacity at ‘X’ price then I can go bid at 2X but not at 3X. We have a prudent financially driven decision-making process and won’t let our balance sheet get affected.
Did you imagine the bidding processes around the bankruptcy auctions would play out as they have?
I never thought the Insolvency and Bankruptcy Code (IBC) would become so complex but when there are technical legalities and lawyers are involved. They always end up becoming more complex than perhaps what they need to be. However, to be fair, these are new laws and it’s early days, and things are being figured out. I feel it will all settle down.
How bullish are you about the business environment in reference to the steel industry for your company?
If you look at steel, we are consuming close to 95 mtpa in India. By contrast, China is consuming 700 mtpa. Then if you look at cement, we are at around 300 mpta and China is somewhere at 2.5 billion mtpa.
Fine, we may not be at those levels but to get to some percentage of it is reasonable — at least 40 per cent of those levels in a few years from now. In this country, I always believe that we have to provide the supply and the demand will come, and not the other way around where you go in with market surveys and all that.
The word is that of late you’re much more vocal about competition, the economy and business views in general?
Well that’s only because I now have a Twitter handle and can communicate in a public way, which I couldn’t earlier. So, for example, I had said attempts to declassify promoters as non-defaulting are making a mockery of the bidding system and are totally wrong, which I maintain.