LONG READS
JSW Group: Life Beyond Steel
India’s biggest steelmaker led by Chairman Sajjan Jindal zeroes in on cement, paints, ports, power, EVs and drones among new opportunities thrown open by India’s economic boom.
By NEVIN JOHN, Apr 10, 2023 19 min read
ONE EARLY SUNDAY morning in December, when Toranagallu village in Bellary-Hospet iron ore belt of Karnataka is yet to wake up from its weekend slumber, a Bombardier Global Express lands at Jindal Vijaynagar airport in the village. On board is JSW Group chairman Sajjan Jindal, here to take stock of Vijaynagar SteelWorks that is expanding capacity from 12 million tonnes (MT) to 19MT by next financial year.
For shop floor workers familiar with Jindal’s weekend self-charging habits, the visit is hardly a surprise, though. Sajjan Jindal tells Fortune India his world revolves around coils & bars, capacities, markets and product innovations. This passion drove the second son of industrialist and politician, late O.P. Jindal, to counterhe might of Tatas and Mittals to build from scratch the country’s largest steel empire with 27MT capacity in 30-odd years. Now, the $22-billion group is spending ₹48,852 crore to scale up steel capacity to 37.8MT by March 2025. Next targets are 50MT by March 2027 and 75MT by March 2030. In doing so, Jindal hopes to reinvent JSW Steel as one of the world’s largest green steel producers. “If we make 75MT the way we are making 27MT, the world will not accept it considering the pollution the capacities will produce,” says Parth Jindal, Sajjan’s son and MD of JSW Cement and JSW Paints.
But steel is one part of the story. Sajjan Jindal’s eyes are set on opport- unities that India’s rise as one of the few bright stars amid global recession is throwing up. Jindal expects domestic private sector groups like his to play a big role in India’s journey from a $3-trillion economy to a $10-trillion economy in 10-12 years. His target: multiply revenues three-four times to $60-80 billion by 2030.
Ste alone cannot take him there. So, he is looking beyond — at paints, cement, renewable energy and ports besides emerging businesses like electric vehicles (EVs) and drones. At the same time, captive businesses such as power generation and ports are being given a free hand as separate companies to grow independently using their own cash flows. The entry into cements and paints are adjacencies since they use inputs from the group’s steel business. EVs will require building a completely new business from ground-up through technical collaborations, a bigger challenge.
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Green will have to be a vital theme in all businesses, old as well as new. Of these, JSW Energy is key to green ambitions of group companies. The electricity utility company intends to become a products and services player and add solar and wind power projects to expand from 6.3GW to 20GW by March 2030. It is investing in manufacturing wind turbines, sola pnels and lithium-ion batteries and is implementing green hydrogen and green ammonia projects. This will ensure enough supply of green energy to group entities such as JSW Steel. The steel major, as part of its green push, is looking to replace coking coal with green hydrogen. JSW Cement’s green journey started with using slag from steel plants and fly ash from thermal power stations as it looks to stop limestone use and its mining.
“The group will add a minimum of two-three businesses by 2030,” says Sajjan Jindal. The business development team he heads has been looking at opportunities in emerging areas such as defence, EV, semiconductor, drones, IT services, among others. “As a large business house, it is necessary for us to explore these opportunities,” says Jindal. The group is in the middle of a debt-funded ₹85,000 crore capital expenditure cycle that will go on till March 2025.
Debt has been the key to JSW’s growth, unlike rival steelmakers Tata Steel and ArcelorMittal, whichredced debt during Covid-19. On March 31, 2022, JSW Group’s net debt was ₹75,000 crore, up from ₹69,000 crore in FY21. In nine months till December-end 2022, it had grown by another ₹13,000 crore.
In March quarter, though, group debt will come down by ₹3,000-4,000 crore and is expected to be around ₹85,000 crore by end of FY23, says Seshagiri Rao, joint MD and group CFO, JSW Steel. Group earnings before interest, tax, depreciation and amortisation were ₹45,000 crore in FY22. It posted a net profit of ₹25,000 crore on revenue of ₹1.65 lakh crore. Can these metrics support the debt-fuelled expansion amid financial turbulence and tough competition from peer conglomerates?
