Sajjan Jindal, 50, vice-chairman and managing director of JSW Group, part of the $10-billion O P Jindal Group, views the collaboration with JFE Steel Corporation — the world's sixth-biggest and the second-largest in steelmaking in Japan — as a marriage that will last many years and will have far-reaching consequences on the future direction of collaborative steel manufacturing in India and Japan. Speaking to P B Jayakumar on the sidelines of a press conference to announce the collaboration, he elaborates on JSW's plans for the future. Edited excerpts:
How will you benefit from this long-term collaboration with JFE? Will it involve equity investment from the Japanese partner?
The two of us have our own areas of strength and expertise and this will help in achieving our long-term goals. JSW has a good track record in executing projects and is one of the fastest growing steel makers in the world. JFE has technological capabilities and huge volume business, with value-added products and a large basket of products. This will help in the growth of JSW and JFE’s presence in India. The partnership will involve equity investments at a later stage, but it is too early to comment on that, as we have just signed a collaboration agreement. Task force committees of JSW and JFE are working together to finalise the areas and ways of collaboration.
What are your capex plans in the short- and long-term? How much of investments are required for setting up the proposed brownfield and greenfield facilities?
Currently we have 7.8 million tonnes per annum (mtpa) capacity and this will increase to 11 mtpa by March 2011. These are ongoing brownfield expansion projects at Vijayanagar and Salem, with an investment of about Rs 8,000 crore. Once this is over, we will take up two greenfield projects in West Bengal and Jharkhand. These are large projects of about 10 mtpa and will require an investment of about Rs 70,000 crore, spread over about 10 years. Our plans are to reach 32 million tonnes of steel production capacity by 2020.
Your current debts on a consolidated basis are about Rs 18,000 crore. Will these huge expansion plans cause trouble in future?
Considering our scale of operations and cash flow, the current debts are not at alarming levels. We will generate cash to the tune of over Rs 3,000 crore for this year and in the coming years, it will be about Rs 4,000-5,000 crore, which will be used to bring down the debts. The Rs 70,000 crore investment is over a period of 10 years and we will have many options like a combination of debt and internal accruals and strategic alliance, like what we are planning for the Bengal project.
When are you planning to launch the initial public offer of JSW Energy?
Soon. It may happen within the next for-five weeks. We are evaluating the market situation.
