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The future of steel industry is in using green energy: Sanjeev Gupta, GFG Alliance

Suresh P Iyengar/ Thomas K Thomas Mumbai | Updated on July 29, 2020 Published on July 29, 2020

Founder of GFG Alliance Sanjeev Gupta

Government should give supply-side support instead of imposing trade barriers: Founder GFG Alliance

Ludhiana-born British businessman and founder of GFG Alliance Sanjeev Gupta is on a mission to grow his steel empire amid a global slowdown. He wants to grow the business to 28 million tonnes capacity over the next two to three years, from 18 million tonnes now. While the bulk of this growth will come from Europe, Gupta has his eyes set on India as well. He has also set a target of making his steel group carbon neutral by using green energy, by 2030. In an interview with BusinessLine, Gupta talks about his roadmap, the future of green steel and opportunities in India.

In 2018, you had embarked on acquiring four Indian companies as part of your plan to put together a string of pearls. Of this only one has come through. What went wrong?

Yes in 2018 we had made big plans. But things have not worked out as we had planned. We underestimated the competition. We have learnt from that experience to be patient with a country like India. So far, we have managed to secure one good asset. So our journey in India continues though it would take longer than what we had expected. We will do things cautiously going forward. But India will be in time one of our biggest hubs globally.

Should there be more transparency in the IBC process given your experience with Amtek Auto?

Absolutely. You cannot make decisions based on uncertainty. If you ask me what we will do in India, we will think twice, look at an asset inside out, do ten times more due diligence than what we would do in any other country because of our experience with Amtek Auto.

What is your assessment of steel demand globally given the economic slowdown?

It varies depending on the place, but ranges from 20-40 per cent . We expect this to be the new average. It’s a trying time and it won’t go away for a year-and-a-half. We have adjusted production accordingly. We are doing a 30 per cent efficiency drive.

How do you see the impact of countries closing their borders with stiff tariffs in these challenging times?

GFG Alliance model has always been local. Even though we are a global company, our business is based on local raw material and local demand. We are not a major exporter in any of the countries we operate. I strongly believe in the local and regional economies. Countries should be self-sufficient and evolve their own industry. Eventually, evolution, technology, and growth come with the full ecosystem of industry. This is critical for a country like India which has a growing economy and coming into the world market. India has all the capability to develop the full supply chain for the industry, including raw material, talent, and the market. There is no reason why India cannot be a world leader in the industry.

There is no need for India to import anything for its domestic need if industries are supported to produce products competitively. Having said that, I’m in favour of supply-side support than imposing trade barriers which do not promote efficiency. The government should support infrastructure, R&D, training, and funding rather than the tariff. If you look at China, they have all the support for the industry on the supply side. Their government gives everything related to the supply-side on a platter. Be it infrastructure, training, and cheap funding so that companies can plan big. It makes industries competitive.

How do you see the sops announced by the Indian government?

India is such a big country and it will be really be difficult for it to adopt generous policies adopted by European countries. The focus should only be on supporting industry on the supply side. There has been big clean up in the corporate sector post-IBC (Insolvency and Bankruptcy Code) which is good. Now is the time to invest again with the support of banks and financial institutions. The government’s role should be to boost investment rather than impose trade barriers. They should give incentives for fresh investments in the future of the industry.

I believe the future of the industry is using green energy. India has to take a position as it is going to consume a lot of energy. If it focusses on carbon energy, it will be a great contributor to global pollution. The real opportunity is to build for the future with better technology rather than sticking to old polluting technology. Steel contributes 9 per cent of global CO2; it is the most polluting industry. India is going to produce 100s of billions of carbon steel and build more blast furnace; it will kill our planet.

You have 18 million tonne capacity now. What will it be in two years?

In two to three years, we want to have one million tonnes in UK. In South Wales, we have a plan to build a 2.5 mt steel plant in 3 years. In the US, we bought Bayou Steel and after that Covid happened so we could not focus on it. But it can be a 2 mt plant. In India, we like to see 2-3 mt coming up in 2-3 years' time. We would be adding 10 mt through both organic and inorganic growth in the next few years. Over and above this if there is a consolidation opportunity, especially in Europe, we will be adding further capacity.

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Published on July 29, 2020
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