homeeconomy NewsEY Entrepreneur of The Year | JSW Group's Sajjan Jindal believes the next two decades belong to India
EY Entrepreneur of The Year | JSW Group's Sajjan Jindal believes the next two decades belong to India
Sajjan Jindal, Chairman and Managing Director of the JSW Group believes that the next decade, even the next two, belong to India. Speaking exclusively to CNBC-TV18 Jindal said, “I have been in Europe for the last two, three days and I have been meeting a lot of people from different industries and the whole world is talking about India, everybody is so excited about India. Everybody knows that the next decade, two decades belong to India. So the coming years are going to be for India."
Sajjan Jindal, Chairman and Managing Director of the JSW Group, believes that the next decade, even the next two, belongs to India.
Speaking exclusively to CNBC-TV18 from the sidelines of EY's World Entrepreneur of The Year Awards in Monte Carlo where he is representing India among 49 pother leaders from across the world and sectors. Jindal said, "I have been in Europe for the last two, three days and I have been meeting a lot of people from different industries and the whole world is talking about India, everybody is so excited about India. Everybody knows that the next decade, two decades belong to India. So the coming years are going to be for India. We have been waiting for this moment for probably two decades but finally, we can see the light at the end of the tunnel."
Jindal added that in the renewable energy sector, the company has set its sights on manufacturing batteries in India. Jindal said, "It is a sector that is up our alley, and we understand that business very well."
The awards will be announced shortly.
Also Read: JSW's Sajjan Jindal says IPO on the cards for infra and cement businesses, maybe in next 2 years
Below are edited excerpts from the interview.
Q: Let us talk about India. You are there in Monte Carlo, you are up against 49 other entrepreneurs from other parts of the world. Every day there are reports coming out estimating what India's growth could look like over the next 10 years, what could be the potential drivers of growth, etc, I want to understand from you, what your India bet is as of today.
A: I have been in Europe for the last two, or three days and I have been meeting a lot of people from different industries and the whole world is talking about India, everybody is so excited about India. Everybody knows that the next decade, two decades, belong to India. So the coming years are going to be for India. We have been waiting for this moment for probably two decades but finally, we can see the light at the end of the tunnel.
Q: Let's talk about the JSW Group. The revenue of the JSW Group, which is JSW Steel and Energy combined has grown at a CAGR of a little over 17 percent over the last five years between FY19 and FY23. Steel, cement, infrastructure, energy, paints — revenue of $22 billion. You talked about the growth projections for India, let me ask you about the growth projections for the group. What could the group look like in the next decade?
A: It is very difficult to project or to predict but we as a group are in the infrastructure space and it is closely connected with the growth of the country. So as India grows, we will grow faster because we have to meet the needs of a growing India. So therefore I am very optimistic that in the next seven to 10 years, as the country gets close to the $10 trillion mark, we will be also up there, we will match up India's growth or better that growth.
Q: What we are seeing today is a lot of Indian conglomerates, a lot of the large Indian legacy businesses are now diversifying into new businesses, especially more consumer-oriented business and that has been the case as far as JSW is concerned as well - whether it is the renewable energy transition or the paints business, these are new but adjacent areas that you are getting into. What could we expect in terms of new bets from here on or do you think you have enough on the plate for now?
A: It is the need of the hour that one gets into consumer business as well. However, our strength lies in the core sector of the industry and that is where we are very much focused as JSW. Simultaneously we are also investing in areas that are consumer-oriented because that does not call for very large capital expenditure, so therefore we want to check out that sector as well. So most of the groups in the country as you rightly said are entering into consumer durables even though they were in the infrastructure space.
Q: When you talk about the consumer bet and the play on consumption what will that mean? It has been about four months since our last conversation where you said that you were revisiting your plans to get into the electric vehicle business at the premium side of electric mobility car space, where are you on that plan at this point in time? How close are you being able to take that forward? There have been a lot of rumours and speculation that you could possibly be eyeing MG Motor as well, is there any truth to that and where else within the consumer space are we likely to see you make a play?
A: So there are many areas that attract us, for example, as part of our renewable journey, we are looking to manufacture batteries in India. That is a very large area and we feel that we are pretty kind of organised to be in that sector. It is a sector, which is up our alley, and we understand that business very well. So that is one area we are looking to do.
On the electric vehicle (EV) front, we are continuing to work on the strategy. We haven't yet closed any deal, or we haven't yet decided or put our finger on the final product. But we are going to work on it over the next six to eight months and try and see that we can build the electric vehicle. I am very excited about this opportunity for India because I feel that over the next seven to ten years, electric vehicles are going to be the major mobility driver in the country. We want to be there when this idea or when this opportunity arises.
Q: You have sort of sidestepped my question on whether you could potentially be looking at a deal with MG Motor. I mean, you are somebody who hasn't shied away from acquisitions across your businesses, and you have gone after distressed assets in your other businesses, I am not suggesting that this is a distressed asset, but is there any truth or any possibility of inking a deal with an existing electric mobility player?
A: So always, it is an easier route to take through acquisition and especially in an area where you are not present. In a steel business, it is not necessarily that we will go for acquisition because that is okay. But in a new area, whether it is battery or EV or something else, which is not our domain industry, an acquisition could be an area. But through acquisition, it also gets a little bit more complicated, because it is not designed to your specs, and you may not really get what you want. So it is both ways.
On MG Motor if you are asking me specifically because I don't shy away from difficult questions, that is also on our list. Could be one of the options if they want to sell but I am not sure as yet.
Q: Majority stake — is that what you are eyeing as far as MG Motor is concerned? And what else is on that list? You said that, that is one of the contenders on the list, what else is on the list?
A: When I said list, what I meant was that there are many opportunities, global opportunities, they are knocking at India's doors and they are looking for good partners in India. So we could partner up with European companies, Japanese companies, and Chinese companies. So there are so many opportunities which are existing today. There are not many, many large groups in India who are right there to grab that kind of opportunity. So JSW is a good sort of organisation to tie up with.
Q: You talked about partnerships potentially, with European companies, with Japanese companies, even with Chinese companies and I would imagine that that is in the context of MG. I want to understand from you during the COVID-19 pandemic, you had made it very clear that while you are a believer in free trade, you had said that our rules of engagement, especially on the economy, and business needed to be very different with China, because in your words, China had not behaved properly. Now, is there a change in position there, as far as dealing with China and Chinese business is concerned?
A: So, there are two things, one is that in EV, China is way ahead of global competition. So, therefore, China becomes a natural ally, as far as new technology in battery and electric mobility is concerned so that is one part of the story. On the other side, if we have a hostile relationship between India and China, then obviously we will not work with the Chinese which is very clear. So as a group, we have always taken that position, but to build India, if the technology is available only in China, or that kind of technology, and the cost structure, which the Chinese can provide us and the Europeans cannot, then we have to think twice before we really decide. So I think it's a difficult question to answer, but yes, that is my position.
Q: Let us talk about the overseas ambitions of the group as well, and on the steel side, what we have seen especially even as far as your peer group is concerned that there was a lot of enthusiasm with which steel companies looked outside of India, and now are looking inwards and are looking at expanding inwards, including, of course, JSW, you have done a bunch of acquisitions, whether it is Monnet Ispat or Bhushan Power, and so on and so forth. I want to understand from you, over the next 10 years, how aggressively do you intend to chase overseas growth, overseas acquisitions, and overseas play versus domestic.
A: So clearly today as I said in the beginning, India is the flavour of the world today. So, the whole world is looking at India and India is the growth story for the coming decades. So for us to go and invest outside India when India itself gives us a huge opportunity I don't think makes sense.
When we invested in 2008-2009 overseas at that time, India was passing through a little bit of a lull phase and, and we felt that we need to go outside India to gain experience, understand what is happening in the world market. And for that, we invested overseas which did not go very well, but lately, these assets have turned around and are doing well.
But going forward, we are going to be focusing all our energies inwards in India and we will be expanding our capacities and mostly from brownfield and greenfield expansions rather than acquisitions. Because most of the consolidation that was to happen has already happened and what is left in the Indian market are very small steel companies, which we are not interested in. Unless and until the large public sector comes up for disinvestment, that would be another opportunity for us to acquire, but till then we will be focused on our own growth.
Q: So unless it is a large PSU that is on the block, you are not looking at acquisitions in any of your spaces within the domestic market, a contender like NMDC steel where that to materialise would that be up for grabs?
A: That could be a candidate because it's a public-sector undertaking. So, as I mentioned, we would take a look at it.
Q: You talked about greenfield and brownfield expansion, the combined cash on the books as of today as of March 2023 stands at a little over Rs 25,800 crore. What is the ambition now as far as expansion is concerned, given the fact that you believe that we are going to see significant growth from the current levels as the Indian economy which is your bet, continues to grow?
A: As the country grows, the country would need a huge amount of steel. The steel ministry, Government of India has projected that India would need close to 250 million tonnes of steel in the next seven years from 120 million tonnes last year. So, which is over 100 percent growth. So, therefore, being the leading steel company in India, just to keep our market share, we at least will have to double our growth and double our capacity from today.
If we want to take a larger market share, we may have to even grow more than that. So, that is a huge investment and that calls for big projects that we will have to set up. Because the country would need so much steel and there aren't many steel companies that can grow that fast to meet the growing demand of India.
Q: By when do you anticipate that you will be able to double or in fact, more than double your capacity? And if you can leave me with a ballpark investment figure because as you pointed out yourself, it will require significant capital, what could that mean? And potentially what's the time period that we're looking at, for you to double capacity?
A: So, if you want to go into the numbers, right now, we are at 28 million tonnes, and our idea is to go over 50 million tonnes by 2030, which means that we will be increasing our capacity by 40 percent if not 50 percent, or if doubling, so that means 20 to 23 million tonnes capacity, we will be adding. The thumb rule in the steel industry is that for every million tonnes, you have to invest at least a billion dollars, if not more. So, therefore, we are talking about close to $25 billion in the next seven years.
Q: If I may ask you about cement and paints, and specifically as far as paints is concerned, are you satisfied with the performance that you have been able to achieve? What's the target now- near term for FY24 and long-term by 2030? And on the cement side, a possible listing anytime soon?
A: So paint is the consumer-facing business and this is our first consumer-facing business in the group. Therefore, whatever has been achieved is pretty satisfactory. I was not expecting that we will be doing that much, but the team has done an excellent job and is on its way and is doing very well, we are in fact doubling the capacity. There are already talks of building two more new paint plants in India. So, therefore, that's satisfactory progress.
On cement, because JSW Cement is a green cement it uses a lot of slag from the steel plants and fly ash from our power plants. So, therefore, it is a very natural fit and it is kind of doing very well. It's growing and keeping pace with our other business growth. So, therefore, both businesses are doing well.
On the IPO for cement, there is a plan both for the infra and for cement to do an IPO over the next couple of years and if the environment is good, probably will do the IPO of cement as well.
Q: Let me ask you about paints, I believe that the internal target is to grab a 10 percent market share by FY26. On course to do that? And you also talked about adding capacity, is that also just going to be greenfield or are you looking at potential acquisitions on the paint side?
A: Mostly it will be greenfield expansion. I don't know if there are any great opportunities in the paint industry for acquisition. So it would be mostly greenfield projects.
10 percent market share in paints is an ambition, that ambition one must have. And therefore, the team is highly charged and is really working to get to the 10 percent market share by 2026.
Q: You talked about significant investment and expansion plans across each of your different businesses involving billions of dollars- just for steel, as you pointed out, $25 billion by 2030 is the expectation in terms of investments. If I were to take a look at the aggregate debt of JSW Steel and Energy, it's at about Rs 1.06 lakh crore, up from Rs 50,000 crore in FY18. Would you need to take on significant additional debt to be able to fund these expansion and investment plans?
A: The steel business will not increase the net debt position it will remain more or less in the ballpark. Whereas the energy business - because renewable energy is a utility business, and its an infrastructure business where the debt-equity ratios are always levered, so therefore, we will probably have more debt as we grow our renewable business.
Q: I read out the citation that was part of the presentation when you were awarded the EY Entrepreneur of the Year award and it talked about how you've been able to adeptly manage complex large projects. I want to understand from you, through the course of your career of greenfield expansion, taking on distressed assets, and integrating them into the business, what have been the key learnings, what has been the biggest challenge that you have had to overcome, but what's also been the most significant learning for you as an entrepreneur?
A: So building a greenfield large project is always very challenging and it encompasses every facet of life. Building a steel plant from scratch is a very tough ask. But it was a journey where we went through ups and downs and difficulties and lots of enjoyment. So it was very interesting. And I being a technical person, I really enjoyed every moment of building the steel plant.
Acquiring stress assets and converting them into profitable ventures is a different ballgame, that doesn't call for that kind of hard work or that kind of dedication, because it is an already existing site, with existing infrastructure, you just need to fix the team, you need to fix the technology if there are some glitches in the technology. So it is a different ballgame.
First Published: Jun 7, 2023 8:39 PM IST
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