JSW Group And Its Unsatiated Appetite For Acquisitions
JSW Group also hopes to start producing electric vehicles by 2020.
JSW Group has never hidden its intention to grow via acquisitions. In fact its cement division has just acquired Odisha-based Shiva Cement Ltd. And chairman Sajjan Jindal maintains that almost all its divisions are on the prowl to acquire stressed assets which make strategic sense for the individual companies.
He believes the private investment cycle is finally turning around in India and argues that it’s only when Indian industry starts investing that foreign players come into the country. “I see green shoots now, with Indians starting to look at investments”, said Jindal to BloombergQuint’s Menaka Doshi on the sidelines of the World Economic Form at Davos.
We are investing in our companies. We had made large investments in our capacities, and now it’s being absorbed into the Indian system. We are starting to look at investments and if we are ramping up investments, am sure others are too.Sajjan Jindal, Chairman, JSW Group
The group’s largest company, JSW Steel Ltd., which acquired Ispat Steel in 2010 and was also in the fray to buy Tata Steel Ltd.’s U.K. business is keen to acquire distressed assets in the metal space, says Jindal. He adds that a majority of the steel assets in India are up for sale and hopes to ink a deal over the next 6-8 months.
JSW Steel is one of the better steel companies in India. It has a good balance sheet and sound management so we can definitely acquire some good assets.Sajjan Jindal, Chairman, JSW Group
He also welcomes the Indian government’s anti-dumping duty laws which he says helped the domestic steel sector recover. And while commodity prices are headed higher, he sees steel prices stabilising at the current level.
His son Parth Jindal, has also decided to make a foray into the paints business, as a part of the complete home solutions conglomerate strategy, and Sajjan says the group has earmarked around Rs 1,000 crore to set up two plants in India. It is also possibly the only sector where inorganic growth may be hard to come by, he adds.
JSW Energy Ltd., which acquired two hydel power plants from the Jaypee Group in 2015 and a 1,000 megawatt thermal power unit from Jindal Stainless and Power Ltd in 2016 is keen to ramp up its presence further by acquiring stressed assets across the country. Jindal though is not too impressed with the government’s UDAY scheme which he says has failed to have a real positive impact on the sector.
A large amount of power capacity is lying idle right now, more than 50,000 MW. Only a big industrial revival can help the power sector, which will take at least two to three years.Sajjan Jindal, Chairman, JSW Group
This, he says, also opens up the possibility of some stressed company looking to sell its asset, which gives JSW Energy the perfect opportunity to expand inorganically.
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Electric vehicles are the new frontier for JSW Group. Jindal says the time is ripe for the group to follow the likes of Tesla Motors Inc., especially since electric battery prices are headed lower. While he will focus on cars, his son, Parth will look to set up a joint venture to build a electric two-wheeler, which Sajjan says should be ready for production before 2020.
JSW Steel’s joint managing director Seshagiri Rao had told BloombergQuint that demonetisation had led to a 10 percent drop in monthly sales in November, and while Jindal admits that the execution was weak, he is quick to add that no one can question the intention behind such a move.
With the Union Budget less than a fortnight away, Jindal hopes that Finance Minister Arun Jaitley will deviate from the path of fiscal consolidation just for one year and ramp up public investment, thus paving the way for the economy to grow at 8-9 percent again.