Sajjan Jindal, the VC and MD of JSW Steel, has turned the company into India’s largest private sector steelmaker in terms of production capacity. But he is unlikely to rest on his laurels. The acquisition of Ispat Industries appears to be just the beginning. His challenge now is to prepare the group to face the hurdles that could confront it in the form of commodity downcycles. But he appears to have a plan up his sleeve. Jindal spoke about how the Ispat deal materialized and the way forward. Excerpts:
How did the deal happen for JSW? Was JSW in the picture when the Stemcor-Ispat deal was in the works?
We were not in the picture when Ispat was talking to Stemcor. It took us 7-8 days to seal the deal. When the Mittals were talking to Stemcor and then to ArcelorMittal, I picked up the phone and spoke to Vinod Mittal to let him know that if they were looking for a partner, then we could send a proposal. He suggested we should meet in person.
You share a good rapport with the Mittals. Do you think this went in your favour even though there were others in the fray?
Yes, I think that went in our favour. Earlier, whenever we met, we never used to discuss business.However, when we heard from banks that Ispat was on the lookout for a strategic partner, we called upon the Mittals to consider JSW as it would be a win-win situation for both the companies.
The deal gives JSW a clear lead over Tata Steel. Being the largest steelmaker in India is a good tag to have. But how do you propose to make it sustainable?
Steel prices are now inching up globally. A downcycle will not make a big difference because we have an efficient plant, there is clear locational advantage and a fast-expanding steel market. However, we are making efforts to fully integrate the plant with a captive power plant and a pellet plant. Plans are afoot to make Ispat's Dolvi plant the lowest cost producer.
To insulate the company from the vagaries of commodity cycles, are you looking at iron ore mines as well?
Yes we are looking at iron ore mines. We acquired mining rights in Chile. For coking coal, we are looking at mines in Jharkhand. So, in the next 4-5 years, we would have achieved backward integration.
Will JSW take advantage of sourcing of hot-rolled coils (HRC) from Ispat's Dolvi plant? At present, you source it all the way from Bellary.
Totally. We will consume our entire requirement of HRC for our Vasind plant from Dolvi.
What would this mean to existing HRC customers of Ispat, such as Uttam Galva?
They will continue to supply to customers like Uttam Galva which are based in Maharashtra (sources 15% of its HRC requirement from Dolvi). But Ispat was also supplying to customers in other parts of India, which JSW's Vijaynagar plant would now service.
You’re considered to be a stern administrator. Would there be some ‘cleansing’ at Ispat, which was supposedly mismanaged?
I’m an administrator for sure, but I am not stern. The mismanagement was all about mishandling due to financial indiscipline. We have a strong organization in terms of fiscal discipline. We adopt a disciplined approach to costs. This approach will create a strong organization in JSW Ispat Steel as well. We will shuffle people across levels. This is part of JSW's rotational policy. We would send people from Dolvi to Vijaynagar and bring people from Vijaynagar to Dolvi. That will certainly happen.
How did the deal happen for JSW? Was JSW in the picture when the Stemcor-Ispat deal was in the works?
We were not in the picture when Ispat was talking to Stemcor. It took us 7-8 days to seal the deal. When the Mittals were talking to Stemcor and then to ArcelorMittal, I picked up the phone and spoke to Vinod Mittal to let him know that if they were looking for a partner, then we could send a proposal. He suggested we should meet in person.
You share a good rapport with the Mittals. Do you think this went in your favour even though there were others in the fray?
Yes, I think that went in our favour. Earlier, whenever we met, we never used to discuss business.However, when we heard from banks that Ispat was on the lookout for a strategic partner, we called upon the Mittals to consider JSW as it would be a win-win situation for both the companies.
The deal gives JSW a clear lead over Tata Steel. Being the largest steelmaker in India is a good tag to have. But how do you propose to make it sustainable?
Steel prices are now inching up globally. A downcycle will not make a big difference because we have an efficient plant, there is clear locational advantage and a fast-expanding steel market. However, we are making efforts to fully integrate the plant with a captive power plant and a pellet plant. Plans are afoot to make Ispat's Dolvi plant the lowest cost producer.
To insulate the company from the vagaries of commodity cycles, are you looking at iron ore mines as well?
Yes we are looking at iron ore mines. We acquired mining rights in Chile. For coking coal, we are looking at mines in Jharkhand. So, in the next 4-5 years, we would have achieved backward integration.
Will JSW take advantage of sourcing of hot-rolled coils (HRC) from Ispat's Dolvi plant? At present, you source it all the way from Bellary.
Totally. We will consume our entire requirement of HRC for our Vasind plant from Dolvi.
What would this mean to existing HRC customers of Ispat, such as Uttam Galva?
They will continue to supply to customers like Uttam Galva which are based in Maharashtra (sources 15% of its HRC requirement from Dolvi). But Ispat was also supplying to customers in other parts of India, which JSW's Vijaynagar plant would now service.
You’re considered to be a stern administrator. Would there be some ‘cleansing’ at Ispat, which was supposedly mismanaged?
I’m an administrator for sure, but I am not stern. The mismanagement was all about mishandling due to financial indiscipline. We have a strong organization in terms of fiscal discipline. We adopt a disciplined approach to costs. This approach will create a strong organization in JSW Ispat Steel as well. We will shuffle people across levels. This is part of JSW's rotational policy. We would send people from Dolvi to Vijaynagar and bring people from Vijaynagar to Dolvi. That will certainly happen.
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