I'm delighted to welcome Mr Sajjan Jindal, the Titan of the Indian steel industry. He's of course has the largest capacity by some length in general steel, and he's helping a complex transition into renewables, energy, into paint, and what is I believe is his latest passion, which is of course the automobile industry. Mr Jindal, welcome to Money Control. So let me start off with you know, there's a lot of talk about capex, Indian private sector capex now. When it comes to you, there doesn't seem to be... there seems to be capex and then some. You have $70 billion of capex you've talked about. So can you break that up into the different sectors? We'll come to that now, but first of all...
Thank you very much for having me today. So when we talk about capex, fortunately or unfortunately, the industry that we are in are all very capital intensive, right? Whether we talk about steel, cement, renewable energy, or even thermal energy, so all these businesses are very capital intensive. The ones which are not capital intensive are paint and auto; they are not capital intensive as much. So we are married to an industry which needs a lot of money, right. So let me... So of the 70 billion, which is the biggest amount of capital spending, which area? So as we speak, is that the Gal steel expansion plan? JSW Steel is the largest industry where we consume maximum capital every year, close to 25,000 crore rupees. But now there is a huge push towards renewable energy as well as thermal energy, right. So going forward, I feel that that would call for more capital than steel, right.
Renewable energy, just to stick to steel for just a moment. So you are at 29 billion tons right now and you've announced plans to go up to 37 and then to 50 million tons over 6 years. So is there enough demand that you see for that happening? What is the source of funding for this?
So we were 29 million tons till last year. We just commissioned our incremental 6 million ton capacity, so now we are 35 million. And by the end of this decade, our stated goal is to be 50 million tons. So I think that's all completely lined up. As far as demand is concerned, you know, last 2 years Indian steel industry has seen a demand increase of about in excess of 10%, 12 to 14% every year year on year, which is a huge demand increase. So in fact, even if whatever the entire industry is setting up capacity, even if you take all of them, even then we will still remain probably short of demand, and therefore there would be some imports that would be needed.
So imports is obviously a trigger to get into one area where you've spoken in public also, which is about imports of Chinese steel particularly through the FTA route with some countries with which India has FTAs. What are your views? You've been obviously making representations, you've been very vocal about it also at a recent CNBC event. What have you heard back from the government?
So no, the government is very... you know, they understand this that there is a problem, they want a solution. Because the problem is that China has so much overcapacity in steel, nearly 100% of their requirement is overcapacity, so they are the largest exporter. I mean, the amount of steel that India produces as the second largest producer in the world, that much steel China is exporting. So China can, on variable cost basis, kill anybody, any industry in the world. So what the world is doing to counter that, they are putting huge heavy tariffs on Chinese steel, whether it is United States or Europe or Turkey or any other part of the world, they're putting heavy tariffs on Chinese steel. India, as I said, is the second largest producer and consumer of steel in the world, is a natural market for Chinese steel. Now because there is some tariff on China, Chinese steel is not coming directly into India, but what is happening is that Chinese steel is getting exported to Korea, Japan, Malaysia, Thailand, Indonesia, with whom we have FTAs. So the Japanese or the Thai companies or Indonesian companies, they are consuming the Chinese steel for their domestic market, and from their own steel plants they are exporting that steel to India at zero duty. So in other words, the Chinese steel is getting circumvented through these countries and coming into India under the FTA. Now we have represented it to the government. The government is looking at it, but they haven't decided as yet.
Let me ask you a general question. I think President Trump has already made it clear that tariff will be his main weapon to protect, you know, to restore manufacturing to the US. He's talked about imposing tariffs on Mexico, on Canada, and certainly on China, perhaps a higher level of tariffs. How does that impact a company like yours at a global level?
So JSW Steel is not exporting any steel to the United States. We have a plant in the US, we manufacture in the US and we sell in the US market. But from Indian plants, we used to export a lot, but then in the first term of Trump, he had levied 25% import tariff on any steel coming from outside the United States to protect their steel industry. After that, we couldn't export, so we are not exporting to the US. But what Trump is doing, and in a way I agree with Trump, the US is a very high cost economy, so their cost of production is very high. So they understand that if we make it zero tariff, they won't be able to compete, and the industry in the US will shut down. The steel industry in the US is shut down, and US industry, if you go there, they are like archaic steel industry, very old, not at all efficient. But now, when they are earning money, they are modernizing, they're building new steel plants, so they will revive their industry. How is your steel business in the US doing? Is it profitable? Yeah, it's profitable. And do you plan to invest more there? No, because we are so focused on India now, we would invest in India, not anywhere else.
Let me shift to automobiles, where I think most of the recent reporting or speculation on the Jindal group has been. So where do we stand in terms of the... let me first come back to you know, your name has been linked to Volkswagen. Is there anything that is happening there with Volkswagen?
No, we had discussions with Volkswagen about a year ago, 6-8 months ago, but that discussion didn't go forward, so we have dropped that project.
Are you... I'm just asking you a question, I don't know whether it's premature. Is there something which you are trying with Ford?
No, we were planning to acquire their plant in Chennai, that's right. And they were reopening, which then they decided that we would rather reopen it, manufacture cars in that plant, and re-export to the developing world. So that's why they then decided not to.
Okay, so where is the in terms of the JV with MG Motors? Where do we stand now? I mean, this is your... how much are you looking to invest over the next? And this is a big diversification which is somewhat because your other diversifications in energy, infrastructure, which are somewhat related businesses, but this is a completely new area. So talk us through that. Is it going to be primarily EVs, or some fossil fuel cars will also be there, petrol, diesel?
So it's actually purely driven by passion. Building the car was always a childhood dream for me, and I always wanted to get into building cars. But then I was so busy building other industries, I never got the time or the inclination to really go to my pet project. Finally, when I saw that the technology is changing in the auto industry and the new EVs are coming in, or new energy vehicles are coming in, I felt that it's a good time to enter this field. And I also saw that the Indian auto industry is not changing that quickly as one would expect. So I said, okay, let me try my hand at it. And then this opportunity of investing in MG Motors came in, and I gladly accepted that and invested there. And I'm very happy we did that. So now through the MG route, we are doing this new energy vehicles. There are a few cars which are going to be maybe ICE engine, but majority of the cars would be new energy vehicles. Besides this, we are also working to build a JSW car, which would be not the MG project, but that would be an independent JSW, housed in a separate company called JSW Auto. What kind of a car is that? That'll be all new energy cars, state-of-the-art, very high technology. I'm very excited about that. It'll take 2 years to come, but it'll be a very exciting project.
So just coming back to the Chinese joint venture. Your joint venture partner is a Chinese company, so they have obviously post-Galvan, there have been issues between India and China. Now that company still has a large stake, I mean it's you obviously MG Motors and your private equity partner. Your plan is to increase your stake up to 51%, right?
So the idea is that eventually Shanghai Auto, which is today 49%, would come down to 35%. That's right. And the Indian investors altogether would be 65%. That is the idea. Out of that, whether we will hold 35 or 40, we haven't decided. But the idea is that it will be an Indian company with SAIC holding 35%. And that would be good for India. Why we need Chinese is that though we have issues with China, border disputes are there, but unfortunately, the technology resides with the Chinese. They are 20 years ahead of the curve, and their cost structure, their technology, their ecosystem is absolutely phenomenal. Even the European auto companies are all going to China to get the technology and making joint ventures with the Chinese companies. So earlier, Chinese companies made joint ventures with Europeans and built auto plants in China, whether it was VW, Audi, GM, or Renault. Now it's becoming the reverse; these companies are making joint ventures in Europe with the Chinese companies.
But I wanted to just focus on the tech. SAIC is the main supplier of technology for the project. It is the supplier of technology for MG Motor. So what is the... how comfortable is that relationship? Because one has also read that the Chinese government is not so keen that Chinese company should supply technology to Indian joint ventures. How comfortable, or to put it another way, how long-term or sustainable is that relationship?
So that is true. I'm also hearing this that the Chinese government is putting sort of restrictions not only in auto industry but across other industries to try and restrict sharing the technology with India, USA, with many countries. But when it comes to MG Motors, we are not seeing any such indication or any such actions being taken where they are restricting supply of technology or anything of that sort. So how long this relationship will last is difficult to say, but I think it should last because we are not a group which is overbearing. We understand that we like to control what we understand, and we allow the partners to function. So we are very flexible as a group. We focus on our industries which is steel and energy; there we don't want any partners to play any role. But in auto, as long as we are learning, we would learn. Once we learn, then we will tell the partners that now we want to run the business.
So in fact, Volkswagen was in that context, I mean in the sense that you might look for a second supplier of technology. I think that was the underlying logic, although you may not have said it. But that possibility still remains open of going in with another partner at some stage.
No, that absolutely. That option is open. My idea is to be very aggressive in the auto industry. I want to change the landscape of the Indian auto industry. Whether that happens or not, time will tell. But my belief is that today, if you see, between Maruti, Hyundai, and Kia, majority of the production is between these three companies. Maybe 65-70% is controlled by these three companies. And I would want that Indian companies must take leadership role in this. Maruti is an Indian company, but basically Suzuki. And now increasingly Toyota. So my thought is maybe I'm not nationalistic, I am of course nationalistic, so I want Indian groups to lead this industry. Like China, there was a time when European companies were leading the auto industry in China, but now Chinese companies have completely overtaken, and all the foreign companies are sort of leaving China.
So tell us about how you will change the landscape of the Indian auto industry. What's the big plan?
By producing very high quality cars, by creating large capacities, very affordable cars for the Indian market, Indian consumers. High quality at affordable price and large capacity. That way I feel we can change the landscape.
Okay, and these would be predominantly EVs and new energy EVs. Could be plug-in hybrid or range extender or hybrid, but hybrid is not new energy, but even including that. And tell us a little bit more about your newly incorporated company. What will you... is the technology there? Will you source it from somebody? Will you tie up with somebody else? Will you look for a joint venture partner?
So as I said, the new energy vehicle technology primarily rests with the Chinese. They have really invested, and even Europeans are going to China to get that technology. So most likely that technology will come from China. And we are setting up our own R&D center, our own design center, so over time we will indigenize it, we will localize the technology. But from the same partner SAIC or from a different partner? From different partners. There are a number of companies in China. Because we don't want to confuse. MG India is a separate entity and SAIC is our partner there. That business will continue to grow. While that is growing, we are building this separate business, separate independent company, which will compete. Even if they compete, it doesn't matter.
So any projections you want to make for JSW MG India in terms of market share, in terms of annual sales? What are you looking at? The fourth position, third position? You're looking for number one obviously, but...
No, no. At the moment, it's too early for us to comment. It's not a very easy industry, it's a tough one because there are established players who have been there for a long time. I would say MG has done a fair bit of good work. They have created their image and they've launched some good products. So I would say between 5 and 7% if MG could capture the market share, that would be a satisfying level in the next 3 years. That would be a good level.
