Mr. Sajjan Jindal, Vice Chairman & Managing Director, JSW Steel Ltd

“Steel buildings are gaining momentum in India.”

November 18, 2008 12:00 IST | India Infoline News Service

JSW Steel, belonging to the JSW group, a part of the US$8bn OP Jindal group, is one of the lowest cost steel producers in the world. The group has diversified interest in mining, carbon, steel, power, industrial gases and port facilities. JSW Steel Ltd is engaged primarily in manufacture of flat products. Incorporated in 1994, the JSW group has grown to US$3.7bn in little over a decade. The company has the largest.

Mr. Sajjan Jindal, Vice Chairman & Managing Director, JSW Steel Ltd, received his Bachelor of Engineering degree in Mechanical stream from Bangalore University in 1982. Post his graduation, he joined Jindal Organisation. He moved to Mumbai to independently look after the western region operations of OP Jindal group in 1983. In 1989 he promoted various companies to ensure complete integration of the manufacturing process. These businesses were formed to achieve the core competency in the production of Flat Steel products. Mr. Jindal has taken over as President of ASSOCHAM in June ?08.

Anil Mascarenhas of India Infoline brings you the highlights of a media meeting to announce JSW Building System?s joint venture with Severfield Reeve Structures of UK. Sajjan Jindal says, ?Steel buildings are gaining momentum in India.?

Steel an advantage

Earlier, when I was part of a government body to promote the use of steel in construction segment, I noticed that buildings were shabbily designed. Huge amount of concrete was used which often blocked the view. Being an engineer, I realized the importance of the need to use steel. Steel buildings are gaining momentum in India. Indian Corporates are increasingly implementing large projects using steel buildings due to the distinct advantage of saving in construction time, enhanced aesthetics and durability.

Steel has many advantages. You can have a much larger span without columns in between blocking the view. From residential and commercial construction point of view, there is availability of more FSI for the same space. Besides, the construction time is less compared to concrete structures.

With steel prices going down it would be even more attractive.

The joint venture

JSW Building Systems Ltd, a wholly owned subsidiary of JSW Steel Ltd and UK-based Severfiled Reeve Structures, a wholly owned subsidiary of Severfield-Rowen Plc, the market leader in structural steel group, have formalized a joint venture company to a create significant steelwork business based in Bellary district of Karnakata.

The JV Company will be called JSW Severfield Structures Ltd and will have a 50:50 equity participation. It has taken us six months to fix the nuts and bolts of the JV. The JV business will consume steel plates, galvanized product thereby providing an added value route for JSW Steel

This is a step needed for the country. New technologies in construction are not very popular in India as we are more of a cement dominated country. The railways are an exception as they have been using more steel as raw material for bridge construction. Capacity and cost. The project having a capacity of 35,000 tons per annum is estimated to cost ?30 million (Rs2.20bn) and will be funded through a mix of two third debt and one-third equity. The turnover at full capacity will be over ?50 million (close to Rs4bn).

Replicate the success

Depending on the success of this JV, we will look at adding similar plants. It is difficult to transfer structured steel products. We will look at supplying beams and plates. What we bring to the table is the knowledge of the Indian market.

The scope is huge

India is a different market. It is driven by supply. The alternate material is cement. Our capacity would be 35,000 tons a year which is miniscule. We have a huge market potential. Our internal studies conducted few months ago show there is around a million ton gap between demand and supply. Conversion from cement to steel will cause more demand.

70% of Europe and 50% of US are using steel. India is presently 28% urbanized while worldwide urbanization is 40%. Expectations are that urbanization will touch 40% in India by 2020.

In UK, the steel cement ratio is 1:1. In India cement-steel ratio is 3:1. The potential therefore is extremely high.

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