Going forward, India should be the steel producer of the world, not China: Sajjan Jindal

By Nikunj Dalmia

We are now looking at industry 4.0 wherein we are trying to make the process absolutely state of the art, says the JSW group Chairman.

Talking specifically, about the manufacturing sector, there are two outliers – one is the auto industry. It is a very complex industry but Indian auto companies are big exporters especially in two wheelers. Indian pharma industry, a complex industry which involves imports from API from China, processing it here and yet we are globally competitive. Why is that Indian manufacturing sector, at least at entry level, not very competitive? Is it land, is it government policy, is it skill, is it interest rates?
All the issues that you have named are there. But if we say that in China there are no issues, I would not agree with that. In India, we have issues of land, of labour, of getting finance because the cost of finance is very high. But then, we have a lot of advantages too. We have a huge market. We have 1.35 billion people living in this country which give us a huge market. Therefore, we can go on tom-tomming that we are not getting land. But why? Because we want land in Gurgaon. The auto industry will say oh! I want to set up a plant in Chennai, I want to set up a plant in Bangalore. You do not have to do that.

If you want to get land, you can get land maybe 100 kilometres from Bangalore or 100 kilometres from Delhi, where you can get any amount of land. There is no problem. Yes, finance is expensive in India but you can borrow in dollars. You will get international rates of finance in dollars. Then you have created your own imports and exports, you create a dollarized balance sheet.

So if you want to do it, if you are steadfast in your thought process, if you decide that you really want to make Atmanirbhar Bharat, then these are all excuses and then you just have to go out there and you have to say that I will make the product and I will not bring the raw material from China. I will bring it from some other parts of the world if they are not available in India and manufacture the finished products in India. In the bargain, if you need some support from the government, I am 100% sure this government will definitely support the people or the companies who want to create an alternate to China.


But can we do what Chinese big players have done? They sometimes have been slightly irrational about pricing because capacities were mothballed there. They were dumping a lot of steel in global markets. You are a listed company, you are answerable to your shareholders. You also have global investors which means you will have to protect your margins, return ratios. How does one compete because you will have to do what is logical and what commercially makes sense and Chinese manufacturers are out there to just grab volumes?
So the Chinese were doing that. They were getting highly subsidised by their state governments. They were exporting over 100 million tonnes globally which now has dropped to less than half of that. When the Chinese started dumping, every country in the world which had their own steel industry, they put up anti-dumping duties or high tariffs on the Chinese imports. Therefore they cut their own feet and now Chinese exports have dwindled as far as steel is concerned. The whole world realised that they were not market driven and they were grossly subsidising their own products. Now, every country has put up anti-dumping barriers -- right from Brazil, Argentina to the US, Canada, Japan, Korea or India.

Each crisis always creates an opportunity and that is what you have also managed to do with the JSW Group. Each time you saw an opportunity, you were able to create capacity, enjoy the arbitrage and build best manufacturing capacities. How will the Covid crisis change your capital allocation policy? What are the corners you would be cutting, what are the automation processes you would be adopting now?
It is a very important point. Right now, what is keeping me busy is how to digitalise the company, how to automate the process because the steel industry is as heavy as any industry can get to be. It is the heaviest industry in the world and also it is a highly manpower intensive industry.

But given today’s environment with artificial intelligence (AI), machine learning and digitalisation, a lot of things can be done. As they say, never waste a crisis because every crisis brings an opportunity. We are not letting it go by and we are working to modernise our facilities. Our facilities are probably the most modern facilities in the world. But we are now looking at industry 4.0 wherein we are trying to make it absolutely state of the art as far as processes are concerned.

For example, our locos which are moving hot metal from the blast furnaces to the steel melt shop, have two people working on it. First we are reducing one person and then we are going to make the process autonomous. So that loco will start from point A and will automatically stop at point B without any man into any phase. We are doing many things like that. Work is going on at a very high pace by now as we speak.

The selling price of steel is a function of international prices which are dollar dominated. Your raw material is a function of the commodity cycle but what is in your hand is the cost of production, automation and labour cost control. Could you broadly tell us that directionally where that is headed now? What could be the extent of cost cutting, saving which would be visible in next two to three years?
We are constantly working on cost cutting and improving the processes so that we can reduce the cost of operation and reduce the carbon footprint by improving our operations. All those things are now showing very good results. Indian steel is probably the most competitive in the world, maybe even much more competitive compared to China because we have our iron ore. That is a very big strength. Plus, we have a very high quality of steel manpower and a huge home market. These three factors give us a huge advantage and by building very modern and very state-of-the-art steel plants, our costs are probably the lowest in the world. These factors have helped Indian steel industry to become the most competitive or most profitable steel industry in the world. Going forward, India should be the steel producer of the world, not China.


So the lockdown has been challenging for all of us but personally for you what has been your most joyful moment in this lockdown? Also, what has been your most tense moment in this lockdown. We all know that you love to play sports. You play squash. You are a marathon runner. How did you keep yourself engaged, fit and also active?
I enjoy sports. I enjoy the outdoors and I enjoy being in my factories because I am a shop floor man, I love to be on the shop floor with my workers and I really relish that. I spent a lot of time during this lockdown in Vijayanagar, our largest plant and we have a very nice sports facility there. We have an Olympic school there where all the Olympic athletes are getting trained. I was training with them and we were playing football with the Bengaluru FC team. Sunil Chhetri and everybody were there and I had the best time of my life there. My whole family was with me there. When the flights were stopped, we all drove 800 kilometres to get to Vijayanagar. When I had to come to Mumbai for some work or function, we drove back. I enjoy driving.

So, it was really a fabulous time. The most stressful time was that my two brothers got stuck overseas and they could not come back to India because the flights were cancelled. So, there was a huge pressure and I tried a lot to bring them back but it took a long time, finally they could come back. I think early June they came back and that was a very stressful moment because we are very close and my two brothers got stuck and finally they came back and so that was a big relief.