JSW won’t import any materials from China: Sajjan Jindal

  • 06-Jul-2020
  • JSW won’t import any materials from China: Sajjan Jindal

JSW Group chairman Sajjan Jindal has been vocal about cutting trade links with China. For example, refractories for his company’s blast furnaces will come from Turkey and Brazil, he said in an interview with Bhavya Dilipkumar & Satish John. Jindal also said he’s committed to acquiring Bhushan Power & Steel Ltd but reiterated that the group cannot take on the liabilities of a “tainted and expensive asset”. Edited excerpts:

As border tensions flared, your recent tweets mentioned the need to stop trade with those that are not India’s friends. How viable is this option?

Of course, it is not an easy route. The auto industry is dependent on (China for) 40% of components. The steel industry’s 100% refractories come from China. One approach is to say that war will be fought by our soldiers, and my job is to make steel at a cheaper price by buying from China. But another view is — look at the $100 billion opportunities that Indian companies should tap. There will be some pain in the short run. But see, I respect my country and my army. If they (China) have killed 20 of my soldiers, I’m not going to buy products from them and strengthen their armies more.

‘Exports to Hostile Neighbour to Continue’

What measures has the company taken to lower imports from China?
Directly and indirectly at JSW, there might be over a billion dollars of imports that come from China. And to curb that, we have recently put a clause in all our purchase orders that specify no materials should come from China. Our focus is, no material should be imported from a country that is not friendly to India, specifically China and Pakistan. At JSW, we used to import around 100% of refractories from China and now we have already worked out an alternative supply. We have placed orders from Brazil and Turkey and some from India. Within three-six months, the cost too will neutralise. The new supplies will be coming in by October.

One reason for dependence on China is cost. Will higher costs be transferred to consumers?

When we import equipment (that’s) not from China, it will obviously cost around 10-15% more. We negotiate and even sacrifice some cost for the short term, and once the other countries increase their capacities, the cost will come down. It is a narrow-minded approach to think there is no other alternative.

During the pandemic, the company exported most semi-finished steel to China. Will there be any change in exports to China in coming quarters?

We are not really restricting our exports to China, because that prerogative is with the Chinese to put a stop on Indian imports. But we are prepared if they want to stop Indian imports. As of now, there is no sign of that.

What is your outlook on the demand for FY21?

Rural India is showing positive signs, urban India is slowly coming to terms with the pandemic. There is this gut feeling that on a month-on-month basis, we will see things normalise. In the automobile sector, demand is still very weak. Four-wheelers are now at just 30% of capacity, heavy vehicles around 10%, while tractors are doing well. We are still working primarily on exports — 50% at JSW. By September-October, things should come back to normal. I won’t be surprised if this October, we beat last October’s number.

JSW Steel’s net debt levels are still high at Rs 53,000 crore. Is there any plan to lower it?
Had this Covid not been there, by March-end we were looking to bring down this number to Rs 46,000 crore. But in this, the major chunk is invested in the Dolvi expansion, which is in its final stages, which may take another six months to close. But there are many other projects which we will commission in the next six months. Around Rs 18,000-20,000 crore is invested and it will start giving us returns. We are also trying to deleverage.

The acquisition of Bhushan Power & Steel Ltd (BPSL) appears to be stuck over the Enforcement Directorate (ED) attaching assets. Will there be any change in the deal?

We are fully committed to this. We are waiting for the Supreme Court to come out with a decision. ED has attached the assets, which is not a clean title. This is an expensive acquisition and we cannot take a tainted asset. If everything is all set, we don’t want to let it go. We are in fact very excited to take this forward.

Will JSW be bidding for coal mines?

We will be participating in the coal mine auctions. India imports thermal coal of more than 200 million tonnes. With huge deposits available in India, there is no necessity to import. This initiative will make coal cheaper and more competitive.

Source :- Economictimes.indiatimes.com

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