While leading the $14-billion JSW Group, Sajjan Jindal has never shied away being critical on economic and social policies. The Covid lockdown has hit steel and metal companies the most, as businesses across sectors remain crippled. In an interaction with BusinessLine, Jindal shares his views on the sector’s prospects ahead. Edited excerpts:

Will a full-fledged revival of steel production and industrial activities create a second wave of Covid-19 infections?

The threat of the virus will continue for the foreseeable future, till we find a vaccine for it. Now is the time we learn to live with the ‘new normal’ and take bold steps to jumpstart economic activity in a secured manner to ensure livelihoods for millions of Indians. I cannot comment on the second wave of this virus, as even the health professionals are yet to comprehend it fully. India Inc is re-starting all operations with tough safety protocols to minimise the impact of the virus, and will not intentionally put its employees or communities at risk.

Is the government right in directing corporates to pay salaries in full during the lockdown?

The government suggestion was not mandatory, but to encourage businesses to ensure financial security for their workforce — a directive which I believe was fair and well received. JSW Group has been able to fulfill all salary requirements during this time.

Will the exodus of migrant workers delay the revival of infrastructure projects and steel demand?

It is unfortunate that this lockdown resulted in such a mass movement of migrant workers. However, as economic activity resumes, I believe a strong plan involving India Inc, the government and labour representatives will assure migrant workers of economic and personal safety. This will see a fair distribution of workers required across centres. We may have a few teething troubles as migrant labour return from their home-States — but I think with coordinated efforts across the board, we shall be able to negate the repercussions of this mass exodus. The government should ensure strong fund infusion to fasten infrastructure projects to that ensure migrant workers, upon their return, are gainfully employed over a sustained period of time.

Where do you see the demand for steel going, as Covid-19 cases in India are still peaking?

The start of this fiscal has been turbulent globally, but I am optimistic and believe that the economy will be on a V-Shaped trajectory with a strong demand in the second half of this year. Government policies should frontload infrastructure projects and also provide for stimuli packages that will be beneficial to growth. We are also looking at a favourable monsoon, expected infrastructure spending push and better FDI inflows (on the back of India’s better handling of Covid).

How do you see the export demand for steel?

India should not lose an opportunity to emerge as a location of choice for global companies which are currently realiging their supply chain. In regards to steel, we are seeing a strong export-driven demand — especially in South-East Asia, China and West Asia.

Do you plan on cutting capex for this fiscal?

We are currently in the process of firming up our plans, and will be able to share more details when we declare our annual results.

Doubling capacity at Dolvi and other expansions of JSW Steel are coming at a time when the domestic demand is at a low...

The lockdown has indeed impacted the economy, but I do not see the impact of this lasting beyond the first half of this year. I do believe that this lockdown has not permanently derailed the sustainable growth trajectory of India, and it will continue to see a long-term structural growth, which will drive demand for steel to support industrialisation, infrastructure-build and urbanisation. Our expansion projects, especially at Dolvi, are very strategic steps to achieve the long-term vision for the company. The Dolvi project is a very returns-accretive project, given the low specific investment cost, and will give significant operating leverage benefit due to lower operating costs.

With lower steel demand, do you expect steel prices to come under pressure?

There could be some pressure in the short term, but it will also be reflected in lower raw material prices as well. I foresee a recovery in the prices on the back of improvement in the domestic demand.

Will the high premium for iron ore mines in Odisha committed by JSW Steel impact margins?

The strategic advantages of raw material security for 50 years far overweighs the premium on the market price for the short term, and there is an opportunity to optimise the logistics cost and drive gains from that. Moreover, with lower dependency on market purchases by a large buyer like us, the market prices are also expected to soften over a period of time.

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