18 SEP, 2012, SATISH JOHN, ET BUREAU
MUMBAI: Sajjan Jindal is on the prowl for acquiring coking coal assets in Australia and Canada to fire furnaces of his 14.3-mtpa steel facilities in the state of Karnataka, even as raging controversies over 'illegal mining' threaten to disrupt his plans to nearly treble capacity in eight years.
"It is a great time to pick assets. I always say that recession or slowdown is the best time to invest or build new capacities because you get everything at much lower cost," Jindal said in an interview to ET. The steel cycle is close to its bottom, he says and this is the time to build capacities and buy coking coal mines.
Jindal alluded to the present day controversies such as 'coalgate' and 'illegal mining' to the "evolving phase of an economy". "These are part and parcel of the growth pangs of the growth economy," he said.
"This is a phase that will pass," he said. Jindal spoke to ET a few days before the government on Friday uncorked reformist measures such as allowing foreign direct investment in civil aviation and retail.
Jindal says he has always been an advocate of auctioning mines. JSW Steel faced a problem because the government went back on its promise to provide a captive iron ore mine for his steel mill in Karnataka, forcing him to depend on others, including traders, for the crucial raw material. "Wherever there is discretionary power, it breeds corruption. We have to make things more transparent and more equitable," he said.
"I agree... (Sajjan) Jindal's firm deserved to get iron ore mines. Iron ore mines have to be given to steelmakers. Mineral assets are not regenerable. Once it is sold it is lost forever," said Santosh Hegde, former Lokayukta who came with the damning report which exposed illegal mining in the state last year. "India should give ore to businesses that add value to the ore for consumption and not for sale or export," Hegde reasoned.
Will Jindal do things differently if he had a second chance, Jindal smiles and says he never had the choice to do things differently. He had to depend on the traders who were exporting ore and later depend on ore from Odisha, at huge freight costs. As cases came to light on illegal mining, he had to face "collateral damage", he said.
Hegde disagrees with this view. "He (Jindal) should have fought it legally, he says. Whatever the circumstances, it cannot justify giving illegal gratification of Rs 20 crore through a subsidiary and Rs 10 crore to an educational institute close to the ruling family," Hegde said.
Ask Jindal whether he would have done anything differently, he thinks for awhile and says "In Rome do as the Romans do."
Jindal's expansion is driven by the shutdown of many coking coal mines in the US and Australia due to surplus steel making in China.
Jindal had taken early bets on Mozambique for coking coal though it had to give up one block after doing studies. However, he does not expect any progress soon as the infrastructure in African state has to improve for mine owners to move coal to other parts of the world.
On Ispat, Jindal says he has tried to quickly turn it around, building a new power plant and merging it with JSW Steel. Analysts say tax saving could be a motive. But Jindal disagrees that tax is a major factor for the merger. "JSW Steel also has lot of tax shelter because of continuous growth."
"We did it because Dolvi is on the sea and expanding there is a very profitable idea. That was the main logic behind the merger," he says.
MUMBAI: Sajjan Jindal is on the prowl for acquiring coking coal assets in Australia and Canada to fire furnaces of his 14.3-mtpa steel facilities in the state of Karnataka, even as raging controversies over 'illegal mining' threaten to disrupt his plans to nearly treble capacity in eight years.
"It is a great time to pick assets. I always say that recession or slowdown is the best time to invest or build new capacities because you get everything at much lower cost," Jindal said in an interview to ET. The steel cycle is close to its bottom, he says and this is the time to build capacities and buy coking coal mines.
Jindal alluded to the present day controversies such as 'coalgate' and 'illegal mining' to the "evolving phase of an economy". "These are part and parcel of the growth pangs of the growth economy," he said.
"This is a phase that will pass," he said. Jindal spoke to ET a few days before the government on Friday uncorked reformist measures such as allowing foreign direct investment in civil aviation and retail.
Jindal says he has always been an advocate of auctioning mines. JSW Steel faced a problem because the government went back on its promise to provide a captive iron ore mine for his steel mill in Karnataka, forcing him to depend on others, including traders, for the crucial raw material. "Wherever there is discretionary power, it breeds corruption. We have to make things more transparent and more equitable," he said.
"I agree... (Sajjan) Jindal's firm deserved to get iron ore mines. Iron ore mines have to be given to steelmakers. Mineral assets are not regenerable. Once it is sold it is lost forever," said Santosh Hegde, former Lokayukta who came with the damning report which exposed illegal mining in the state last year. "India should give ore to businesses that add value to the ore for consumption and not for sale or export," Hegde reasoned.
Will Jindal do things differently if he had a second chance, Jindal smiles and says he never had the choice to do things differently. He had to depend on the traders who were exporting ore and later depend on ore from Odisha, at huge freight costs. As cases came to light on illegal mining, he had to face "collateral damage", he said.
Hegde disagrees with this view. "He (Jindal) should have fought it legally, he says. Whatever the circumstances, it cannot justify giving illegal gratification of Rs 20 crore through a subsidiary and Rs 10 crore to an educational institute close to the ruling family," Hegde said.
Ask Jindal whether he would have done anything differently, he thinks for awhile and says "In Rome do as the Romans do."
Jindal's expansion is driven by the shutdown of many coking coal mines in the US and Australia due to surplus steel making in China.
Jindal had taken early bets on Mozambique for coking coal though it had to give up one block after doing studies. However, he does not expect any progress soon as the infrastructure in African state has to improve for mine owners to move coal to other parts of the world.
On Ispat, Jindal says he has tried to quickly turn it around, building a new power plant and merging it with JSW Steel. Analysts say tax saving could be a motive. But Jindal disagrees that tax is a major factor for the merger. "JSW Steel also has lot of tax shelter because of continuous growth."
"We did it because Dolvi is on the sea and expanding there is a very profitable idea. That was the main logic behind the merger," he says.
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