He’s known as the man of steel. And not because he can do a dead lift of 110 kg at the gym. It’s because Sajjan Jindal, the reclusive 60-year-old billionaire chairman of JSW Group, began his career with a steel plant in 1982 and is now head of the country’s largest steel company, JSW Steel.

It’s a journey that’s come with its fair share of ups and downs. But Prashant Jain, joint managing director and chief executive officer of group firm JSW Energy, says, “Nothing, not even the biggest calamity, can ruffle him because he sees every challenge as an opportunity and is always willing to adapt to the changing environment.”

We go to JSW’s steel-and-glass corporate office in Mumbai’s Bandra-Kurla Complex to find out how Jindal battled the odds to reach the top in the infrastructure business and how he plans to stay ahead in a highly competitive steel industry. The iconic 10-storeyed building is a reflection of the increasing clout of JSW Group, one of India’s largest conglomerates with holdings across core sectors from steel and energy to cement and infrastructure. Walk into the lobby and you’re dazzled by the space and light—and, of course, Anish Gupta’s dramatic hexagon installation at the entrance and a 30 ft. by 100 ft. eye-shaped sky court in the centre that diffuses the entire building with sunlight. The building isn’t just studded with installations but the floors for senior management also have paintings by leading contemporary artists from M.F. Husain and S.H. Raza to Laxman Shrestha and Atul Dodiya. The building has a 90-seat stateof-the-art auditorium, a 200-seat cafeteria, and basement parking for more than 275 cars.

Jindal and the group’s flagship, JSW Steel, might have overtaken the oldest private player in the business, Tata Steel, on the way to the grand Bandra-Kurla office—but the journey hasn’t been easy. When Fortune India met him in 2011, he seemed to be sinking under the weight of a host of problems. JSW Steel was at the centre of a raging controversy over illegal mining in Karnataka after a sudden Supreme Court ban on iron ore mining in the state. The ban struck a huge blow to JSW Steel’s plant in Karnataka as lack of ore pushed production down to 30% of capacity.

Image : JSW
Inorganic growth has always been an integral part of our growth journey.
Sajjan Jindal, chairman and managing director, JSW Group.

At that time, we wondered if Sajjan Jindal could get his mojo back. The answer to that is yes because Jindal isn’t one to let a little stumble halt his run. Even though the ban choked supplies to steel mills in Karnataka, he didn’t walk away from the business. Instead, he found new avenues for importing iron ore from Australia. Today, his plant in Vijayanagar is the largest steel plant in the country with a capacity of 12 million tonnes per annum (MTPA) and is expected to grow to 18 MTPA by 2020. Despite the setback and the downturn in the steel industry between 2012 and 2016, Jindal recovered and has grown from strength to strength: He has 14 steel plants, including two in the U.S. and one in Europe, in the bag now.

Over the years, he’s been on an obstacle race of sorts. Most recently, his acquisition strategy suffered a setback when JSW Steel lost out to steel magnate Lakshmi Mittal’s ArcelorMittal, the world’s largest steel maker, in the race for Italian steel major Ilva. He also lost out to the Tatas in the bidding war for Bhushan Steel and ArcelorMittal in the bid for Essar Steel. But Jindal, a mechanical engineer from M.S. Ramaiah Institute of Technology (now called Ramaiah Institute of Technology), Bengaluru, just got up and moved on as usual. After losing the bids, JSW then turned its attention to the acquisition of Bhushan Power & Steel for which it outbid rival Tata Steel Jindal might be a risk taker but he’s also a savvy businessman known to walk out of projects and acquisitions that don’t make business sense.

So, while he was the first to introduce the Corex technology instead of a blast furnace to produce hot metal when it was still untested in India, he had no qualms in walking out of an electric vehicle (EV) project “after carefully evaluating higher-than-anticipated uncertainties in the EV business”.

It is these traits of Jindal—the ability to take calculated risks and remain optimistic even in the face of adversity—that have made the Mumbai-based JSW Group a $13-billion infrastructure conglomerate today. JSW Steel is India’s largest steel player, while JSW Energy stands fourth in the pecking order behind Tata Power, Adani Power, and Reliance Power; JSW Cement, headed by his son Parth, ranks sixth among cement players. The group also includes unlisted JSW Infrastructure which is in the ports and berths business. JSW has even entered consumer-facing businesses like providing steel to steel furniture makers as well as the paints business. “Our focus today is on products where the rub-off effect on the market is much higher because it will increase the brand value of the company,” says Seshagiri Rao M.V.S., joint managing director of JSW Steel and group chief financial officer.

Image : JSW
We are at an inflection point in the power sector, like where the steel sector was two years ago.
Prashant Jain, joint MD & CEO, JSW Energy.

At the heart of Jindal’s empire is JSW Steel, a Fortune India 500 company that ranked No. 24 on the list. It accounts for more than 90% of the group’s revenues, at $11 billion, and has a client list that stretches from IKEA India and Adani Ports to Yamuna Expressway and Chennai Metro. Many of the group’s other businesses are anchored around the steel business which has been growing at an impressive clip. That’s why, within the hushed corridors of JSW Group’s new corporate headquarters, the top management is busy working on a road map to tap into a new-found opportunity. The company wants to grab a lion’s share of an expected 160 MTPA steel shortfall in India in the next 10-12 years with demand expected to outstrip supply because of rapid infrastructure development. The National Steel Policy document of 2017 forecasts steel demand will touch 300 million tonnes a year by FY31 while the current capacity of the steel industry is 140 million tonnes a year.

The top management is non-committal about its exact capacity expansion plan, but stock market analysts and sector experts believe the company is looking to expand far beyond its targeted 45 million tonnes per year by 2030. Analysts say the plan is to achieve 100 million tonnes a year in the next 10-15 years; the current capacity is 18 million tonnes. It is an ambitious task and, therefore, we ask Rao about the market rumour. His response is guarded: “We have already given market guidance that we will be a 45 MTPA steel player by 2030 from the current 18 MTPA and maintain our 15% market share. But whether that number remains static will depend on what our competitors are doing and how much they are increasing their capacities.” Jindal doesn’t pin down an exact figure either but says he believes that, like China, “India too will cause a global sensation by arriving at that magic 300 million-tonne figure ahead of the due date”.

For JSW Steel, the target might be difficult but not insurmountable. It has been on an acquisition spree and plans to pump in ₹65,000 crore over the next three years to expand capacity. It has all the credentials: It has a compound annual growth rate (CAGR) of 16% from 2002 onwards, its capacity has jumped from 1.6 MTPA to 18 MTPA over this period, and it has acquired and turned around loss-making Monnet Ispat & Energy and Ispat Industries before merging them with parent company JSW Steel. The company has a unique acquisition strategy which ensures that even after the acquisition of loss-making firms like Monnet Ispat and Ispat Industries, its existing balance sheet is not overstretched. It puts the acquired unit in a special purpose vehicle and only after it becomes profitable is it merged with JSW Steel.

If there’s one person who can meet the company’s ambitious target, it’s Sajjan Jindal. He started his career in 1982 managing a small loss-making galvanised steel plant in Tarapur on the outskirts of Mumbai with an annual turnover of less than ₹9 crore and a loss of ₹3 crore—and eventually went on to build a sprawling empire. Despite the turmoil in the steel industry with many top steel makers in bankruptcy resolution, JSW Steel’s balance sheet looks healthy. In the past five years, its total income has jumped from ₹51,496 crore in FY14 to ₹70,148 crore in FY18 and profits from ₹451 crore to ₹6,214 crore. Its stock price too has leapt 170% in the past five years. It reported an Ebitda of ₹13,000 a tonne in the third quarter of FY19, second only to Tata Steel at around ₹16,000, a debt to equity ratio of 1:2.4, and a market capitalisation of ₹72,000 crore. And that’s when it has to import most of its raw material requirements like iron ore and coking coal.

Bolstered by higher import duties on steel, JSW Steel is on an expansion spree. Its capacity expansion will come from existing plants, greenfield projects, and overseas acquisitions. It will add nearly 5 MTPA to its Vijayanagar plant and another 5 MTPA in Dolvi, Maharashtra, while 3.5 MTPA will come from its acquisition of Bhushan Power & Steel. Then there are the greenfield projects—a 12 MTPA JSW Utkal plant in Odisha and another 10 MTPA plant in Chhattisgarh. It will add another 4 MTPA from its overseas plants. It exports nearly 12% of its total sales to 100 countries. “Inorganic growth has always been an integral part of our growth journey and will continue to explore strategic opportunities, both in the domestic and international markets,” says Jindal. But the expansion of the Dolvi steel plant, acquired from Ispat Industries in 2010, is of great importance to him because a port plant brings down logistics costs. “This expansion of the Dolvi plant to 10 MTPA in FY20 will make it the largest port-based plant in India with state-of-the-art facilities,” he says. Perhaps the only issue in JSW Steel’s balance sheet is its debt of ₹46,000 crore, which is likely to go up even further, once it fully acquires Bhushan Power & Steel. “The next two or three years will be a delicate balance for JSW Steel between sustainability and maintaining pole position in steel-making,” says Abhijit Mitra, an analyst at ICICI Securities. His fear stems from the fact that JSW will have to deal with an aggressive capex programme of ₹45,000 crore over the next three years, and another ₹20,000 crore for the acquisition of Bhushan Power & Steel, at a time when steel prices are coming down.

Broking firm Antique has raised other red flags. It says steel volume growth will be constrained until 2020 because of factors such as increasing raw materials costs and weakness in China. It also maintains that JSW Steel’s overseas acquisition of Italy’s Aferpi and a steel plate and pipe mill in the U.S. will remain a drag on profitability until operations are ramped up. But Rao is unfazed. He says looking at the debt number in isolation can be misleading and other companies have a much higher debt for a similar installed capacity. “If you see our financial leverage in the context of our production capacity, 18 MTPA which will become 24 MTPA by March 2020, then it is not really much, especially when you compare it to our competitors,” says Rao. Essar Steel had a debt of ₹49,000 crore for its 9 MTPA plant and Bhushan Steel had a debt of ₹56,000 crore for its 5 MTPA plant, and those high leverages were responsible for taking down the companies. “Since we have lower debt on our books, there is still enough scope to raise funds,” says Rao. The company has already raised $500 million in dollar bonds in April to fund its capex. U.S. President Donald Trump’s campaign to make in America too has forced a change in strategy.

JSW is investing $500 million to set up a slab manufacturing unit in the U.S. and connecting it to its plate and pipe mill facility in Texas. This backward integration will ensure the company adheres to the diktat of “melted and manufactured in the U.S. itself” and thereby save it a 25% import duty. “Once we complete the project in the next 18 months, this overseas acquisition will start paying dividends,” says Rao. But there are other reasons for optimism among analysts and steel experts. Of the seven major secondary steel players that entered the sector after the 1991 economic reforms, JSW Steel is among the only two that still exist. Jindal Steel and Power, run by Jindal’s brother Naveen, is the other. (Tata Steel and public sector Steel Authority of India have a far longer history in India). Bigger players such as Essar Steel, Bhushan Steel, and Bhushan Power & Steel, and even smaller ones such as Ispat Industries, Monnet Steel, and Adhunik Metaliks, have either been taken over or are likely to be so in the near future, thanks partly to the implementation of the Insolvency and Bankruptcy Code of 2016.

So the real question today is which of the existing domestic or foreign players—Nippon Steel & Sumitomo Metal Corp., ArcelorMittal, Wuhan Iron and Steel—will grab a major share of the new capacity. The domestic battle will be between JSW and Tata Steel, India’s second largest private steel producer, which plans to have 30 MTPA capacity by 2025 after its acquisition of bankrupt Bhushan Steel and its own projects. Rao says the competition will mostly be limited to the existing secondary steel players and reputed global names. Newcomers, he maintains, may find it hard to break into the ranks of the bigger steel players because funding is a major issue. Banks, after drowning their balance sheet with red ink through indiscriminate lending to steel and power players, are more cautious today. World-class players like ArcelorMittal and Nippon Steel with strong balance sheets and the ability to source raw materials globally and sell products in the international market can certainly grab a share of the overall pie. “But foreign players alone cannot add another 160 MTPA in the next 10 years, can they?” he asks.

But is he worried about the imminent entry of ArcelorMittal, the biggest steel player in the world, through the acquisition of Essar Steel, I ask gently. After all, the company can produce nearly 88 million tonnes of steel a year and can procure raw materials from everywhere. “At every press conference and investor meet, I am asked similar questions about the threat from ArcelorMittal,” says Rao with a hint of a smile. “But we are not unduly worried.”

Image : JSW
Our focus today is on products where the rub-off effect on the market is much higher...[as] it will increase the brand value of the company.
Seshagiri Rao, joint managing director and group CFO, JSW Steel.

Analysts too question ArcelorMittal’s ability to destroy all opposition. “If they [ArcelorMittal companies] are so efficient and can make every type of steel and can kill all competition, why are their average earnings before interest, tax, depreciation and amortisation (Ebitda) or earnings per tonne of steel only $80 or $90 every quarter compared to $170 for JSW Steel and $250 for Tata Steel?” says an analyst, who refused to be identified.

JSW Steel has emerged stronger after learning from its past mistakes. For example, it has diversified its sourcing instead of relying on a single supplier and less than 50% of its coking coal comes from Australia; the rest is from South Africa, Mozambique, Russia, Canada, the U.S., and Indonesia. “We have not only diversified our sourcing base but also ensured that we are no longer dependent on a single supplier in any of these countries. Today, we will have no problem if there is a disruption in any country,” says Rao.

Having synergies within the group is an added advantage. For instance, 17% of power produced by JSW Energy is used by JSW Steel, while gases emitted by their steel factories are used to generate power. Similarly, JSW Steel’s coal and iron ore import requirements are through ports set up by JSW Infrastructure, much of the cement produced by JSW Cement is used by JSW Steel, while the slag, a waste product from the steel industry, is used as a raw material in its cement plants. Apart from steel, Sajjan Jindal is also betting on the power sector. His deputy, Jain, is optimistic. “We are at an inflection point in the power sector, like where the steel sector was two years ago. The excess capacity of 25,000 MW to 30,000 MW in the system will be over in the next two years and then we will have a shortfall for the next two to three years.”

On many an occasion, Sajjan Jindal had said that challenging the status quo has been his philosophy of life. He’s also not one to give up easily. “When you go through a downturn, instead of becoming demoralised and depressed, it’s better to think in a positive way,” he told Fortune India in 2011. It’s a spirit he’s probably inherited from his father, O.P. Jindal, a politician and philanthropist from Hisar in Haryana. O.P. Jindal was a farmer’s son who began with a small bucket-making unit in Hisar when he was just 22 before he set up Jindal India, a pipe-production unit, in 1964 and then his first big factory in Kolkata called Jindal Strips. More than 50 years down the road, Sajjan Jindal has also proved his mettle.

This story was originally published in the May, 2019 issue of the magazine.

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