Steelmaker JSW ‘bullish’ on grabbing share of India’s infrastructure boom

Indian industrialist billionaire Sajjan Jindal says his steel, paint, cement and energy conglomerate will supercharge its investments to around $65bn over the next seven years, aiming to profit from a national infrastructure push that has made India the world’s fastest-growing market for steel.

His family-led JSW Group also plans to expand into sectors from defence to electric vehicles and is seeking “aggressive growth” in renewable energy, Jindal said in an interview with the Financial Times.

The plans show how India’s biggest industrialists aim to capitalise on Prime Minister Narendra Modi’s priority to revitalise the country’s infrastructure and make it an economic powerhouse in Asia, as India is projected to overtake China as the world’s most populous country this year.

The government has budgeted Rs10tn ($122bn) to spend on building roads, railways and other infrastructure for the fiscal year beginning this month, a third higher than the previous year. Such an acceleration is why JSW Group is “so bullish”, its chair said.

Although JSW is smaller than the storied Tata Group, which JSW competes with for the title of India’s biggest private-sector steelmaker, Jindal is one of the few billionaires whose influence straddles India’s economy.

Taking over a portion of his politician-industrialist father’s business empire, Jindal has led JSW Group as chair since 2011, growing its metals business into India’s biggest listed steel company by market value at Rs1.7tn. The group also has a listed energy business and unlisted paint, cement and ports units.

Jindal was one of the business leaders who initially agreed to back rival industrialist Gautam Adani, after the tycoon’s empire came under fire from New York-based short seller Hindenburg Research. A scheduled public share sale was pulled, although Jindal had agreed to take a stake.

India is “a very small club”, said Jindal, and his motivation was “to have solidarity with our colleagues in the industry”, adding Adani did not call on him to put in money.

“Adani will get this as a learning experience and then take accordingly measured steps for the future,” he said. “Overleveraging is a double-edged sword — you can grow fast but if God forbid something was to go wrong, then it can take you face down into the mud.”

“I think this Hindenburg thing has had a telling blow or telling effect on Adani. Their growth will slow down . . . but I’m sure they will bounce back,” he said, adding Adani had “good assets on the ground”.

Jindal said he was wary of leveraging and that JSW’s $65bn-$67bn investment plan to expand existing business lines and open entirely new ones — more than double the $25bn he said it invested over the past decade — will be mostly financed by the group’s own cash and selling shares.

Steel is “a cyclical business, and we cannot afford to have a high-leverage regime”, he said.

JSW Steel swung to an unexpected net loss in its September quarter before recovering the following quarter, underscoring its exposure to both commodity price turbulence and shifting steel demand.

India’s infrastructure splurge is expected to fuel steel orders. The World Steel Association estimates India’s steel needs will swell 6.7 per cent from 2022 to 2023, compared with a global growth rate of 1 per cent.

To grab market share, JSW says it will boost total steel production capacity from 28mn tonnes in the 2021-22 financial year to 39mn tonnes in the year ending March 2024.

Jindal added that JSW would borrow to help finance expansion in renewable energy. It recently bought 1.75GW worth of wind and solar assets for $1.5bn, $1bn of which Jindal said was debt. However, the group aimed to be “the least leveraged company within the energy space”.

JSW Group’s total debts stood at $10bn, he said, against revenues of $22bn and operating profits of $6bn for the 2022 financial year.

Using its mining experience, Jindal said JSW would “100 per cent” be bidding for lithium blocks in India’s Jammu and Kashmir region, which the government is set to auction this year.

Lithium is integral to batteries, and the industrialist said he wanted to manufacture electric cars, reviving a project the company started in 2017 but failed to progress.