Courts, banks must fast-track Essar resolution: Sajjan Jindal, Chairman, JSW Group

MUMBAI: Courts and banks should expedite the resolution process of Essar Steel, which has been going on for more than 20 months, said Sajjan Jindal, chairman at JSW Group that failed in its bid to acquire the prized steelmaking assets through the bankruptcy court.In an exclusive interview to ET, Jindal conceded that the entry of European steel giant ArcelorMittal, which has won the race for Essar Steel, will bring discipline in the Indian steel market and make it more organised.He, however, felt the near-$10 billion (Rs 69,272 crore) cheque that the Lakshmi Mittal-led ArcelorMittal may be writing for Essar Steel — accounting also for the price it will ultimately pay for ports, pipelines and Uttam Galva’s dues — may not be viable. If JSW were to acquire Essar Steel, even an offer worth $5 billion would have been a tad too steep, Jindal said.“...but beauty lies in the eyes of the beholder,” he said.Jindal, however, warned that delaying the handing-over of Essar Steel might force Lakshmi Mittal to change his mind. “Given that there are global headwinds to the steel industry and with ArcelorMittal’s global presence, its margins are under tremendous pressure,” he said. “At this stage if the courts and the banking system continue to delay the matter then my worry is that ArcelorMittal may find some way to get out of the deal.”JSW Steel had actively participated in the sale of stressed assets that the Insolvency and Bankruptcy Code has facilitated. However, it could not bag the asset it wanted the most — Bhushan Steel — which would have given the company a five million tonnes ready steel capacity and a foothold in the east market. Rival Tata Steel won the race for Bhushan Steel.Defending his seemingly conservative approach in bidding for Bhushan Steel, Jindal said though JSW Steel felt it had bid the “top dollar” for the asset, Tata Steel ended up bidding higher than they could have anticipated.69669596 ‘Govt Should Fix Liquidity Crisis’“It is because their investment per tonne is higher than our investment per tonne that they paid more,” he said.After losing out on Bhushan Steel, JSW Steel had also tried to enter the fray for Essar Steel, but by that time “it was too late”, Jindal said. A failure to submit expression of interest on time kept his firm out of the contest for the Hazira-based fully integrated flat carbon steel maker with a capacity to produce 10 million tonnes per annum (mtpa).Out of the crop of 12 highly stressed steel assets sent for insolvency proceedings, JSW Steel has bagged Monnet Ispat and Energy. It also pipped Tata Steel in bidding for Bhushan Power and Steel, though the final order on its acquisition is still awaited.Apart from aggressively expanding its steel capacity that is estimated to reach 40-50 mtpa by 2025, the $14-billion JSW Group is also diversifying into newer, consumer-facing businesses. In 2017, its power arm JSW Energy had announced a plan to enter the electric vehicle industry. However, in March this year, JSW Energy announced it has abandoned the plan due to “high uncertainties associated with the business”.“We were very keen to pursue the business, but then, later on, we realised that we don’t have the core competency in that and also the technology for it is still developing and a lot of changes might still take place,” Jindal said. He confirmed that talks of acquiring General Motors’ Talegaon plant for the project had been “almost finalised”.69669601 Asked whether he would review his decision to enter the EV space, Jindal said, “Never say never.” He, however, conceded that it is difficult to look at the business again in the future.For now, the group is focusing on entering the retail household consumers through its newly launched paints and furniture businesses that require smaller investments.ON LEVERAGEJSW Steel, the flagship company of the group, currently sits on net debt of almost Rs 46,000 crore. It has announced brownfield expansions of both its Vijaynagar and Dolvi plants and is also doubling its value-added capacity.Jindal said with all the investments going towards newer capacities, this year the company’s Ebitda multiple might stretch in comparison to its net debt, but it will get corrected next year when these projects start earning. The company’s net debt to Ebitda ratio is 2.4x currently.Jindal also said that over the next six months, he plans to wind down his share of pledged holding that currently stands at close to 50%.Much like other captains of India Inc, Jindal also batted for the government to “fix” the liquidity crisis. He also exhorted the government to set a target to grow at 12% by announcing big-ticket projects and boosting spend on infrastructure as it would create more jobs.He also said the government should only control strategic assets such as oil and gas, and nuclear power, while others like steel, aluminium and airlines should be given in the hands of the private sector or strategic investors that could run them more efficiently.Jindal said if the state-run National Aluminium Company (NALCO) and Steel Authority of India (SAIL) were put on the block, he would certainly have a look at it.He said by 2025, close to 95% of JSW Steel’s targeted 40-50 million tonnes assets will come from India while the rest will come from the global assets. “After that, we have not yet made plans and they will depend on the demand in India, how it is growing and what is the role of other steel companies,” Jindal said.

from Economic Times http://bit.ly/2MvoaDY