Motoring ahead. Sajjan Jindal expands canvas with EVs and paint

For JSW Group’s Chairman Sajjan Jindal, making cars has been a childhood passion. “I built my first car in a garage when I was 12 years old. It was a small car and I used to go around it in our factory in Hisar, Haryana,” says the 63- year-old industrialist. However, Jindal’s passion took a back seat as he decided to join the family business of making steel.

But 52 years later, after building the world’s seventh largest steel company, excluding China, Jindal is now making his automotive dream a reality. Last week, the JSW group outlined its strategy to corner a 33 per cent market share in the electric vehicle segment through a joint venture with China’s SIAC Motor, the owner of MG Motors.

“This idea of making cars in India by the JSW Group always remained in my head and during 2015-16, when the new technology for electric vehicles came in, I thought that this is an opportunity to enter this business,” he said. In 2017, the group set up a team of experts for making electric cars but the plan did not take off due to the Covid pandemic disruption. But Jindal did not give up his dream so he revived the plan two years back. After looking at multiple options, he decided to form a JV with MG Motors.

To start with, JSW Group, along with other investors, including Indian financial investors, MG Motor India dealers and employees will invest ₹5,000 crore for a 51 per cent stake in JSW MG Motor India while the remaining 49 per cent will be held by Chinese State-owned SIAC Motor. The joint venture plans to roll out a new model every three to six months. “We are all set to recreate a Maruti movement. I recall in 1984, when Maruti first launched its vehicle there was so much excitement and everybody wanted to own one. Today, they have 50 per cent market share. The same urge will be kindled again with our new launches,” he said.

A large canvas

Auto is not the only market where Jindal is looking to disrupt. Even as he scales up the steel business through acquisitions and greenfield expansion, Jindal is eyeing multiple new areas of growth including a significant play in the ₹70,000 crore paints industry and EV battery manufacturing to capitalise on the booming electric vehicle segment.

In the paints segment, JSW is eyeing a capex of ₹750-1,000 crore over the next 2-3 years as it looks to up production capacities by 2 lakh kilo litres (kl) per annum and a plan to corner a market share of 8-10 per cent over the next three years. JSW Paints, the Group’s latest venture, is on course to cross revenue of ₹2,000 crore and will break even at EBITDA level by end of this fiscal.

Launched in 2019, the company has recorded a revenue of ₹1,616 crore in FY23. It has achieved a market scale and coverage of over 60 per cent in paint-selling towns and increased its retailer network by adding more than 2,000 retailers every year. In the recent past, JSW Paints has launched over 20 new products across markets, with new brand offerings currently contributing over 15 per cent to its gross revenues.

Core remains steel

But this does not mean that Jindal has taken the pedal off his traditional steel business. JSW Group and JSW Steel have announced an investment of ₹65,000 crore to set up an integrated steel plant, a port facility and a cement factory at Jagatsinghpur in Odisha.

The listed entity, JSW Steel, will set up a greenfield complex in the industrial city of Paradip that will include a steel plant with a production capacity of 13.2 million tonnes per annum (mtpa). The company currently has a production capacity of 28.5 mtpa

The JSW Steel facility in Vijayanagar, Karnataka, that has an annual production capacity for steel of 12 mtpa is being upgraded to make 18 mtpa. It has 10 mtpa capacity at Dolvi in Maharashstra besides steel plants at Salem in Tamil Nadu, the US and Italy.

JSW Steel will also invest ₹5,500 crore in a grain-oriented electrical steel manufacturing facility through a joint venture with Japan’s JFE Steel Corp in Karnataka. JSW Steel will invest ₹1,300 crore (€143 million) in its Italian steel mill in Piombino.

However, it is the entry of a commodity company like JSW Group into the consumer-focused automotive and paints segment that has puzzled many. Both these markets already have large players dominating the consumer mind space. In the auto space, for example, Tata Motors and Mahindra & Mahindra have taken considerable lead in the EV segment. Similarly, in the paints business, there are players like Asian Paints and Berger Paints that dominate the market.

Banking on headroom

But this does not worry the JSW group. “As they always say, good things take time to start,” Jindal said. His confidence comes from the fact that these markets have a huge headroom for growth. For instance, over the next two to three years, the paint industry is expected to continue its growth momentum of 10-12 per cent per annum over the medium term, driven by a thrust on affordable housing, shorter re-painting cycles and up-trading by existing customers, among others. According to experts, the paint segment grows at 1.5 times the GDP growth. This provides enough scope for new market entrants to establish their presence without necessarily impacting the current pecking order.

In the electric vehicle space, the adoption in India has been slow due to high cost, lack of proper charging infrastructure and after sales services. Starting on a clean slate, JSW Group has the advantage of adopting the latest technology.

Jindal ties his passion to build cars to the national cause of reducing the import bill. “I believe EVs are the only answer to cut our import bill on oil. We produce our own energy as we have enough sunlight and wind to produce renewable energy to charge the batteries in the cars,” he says.

JSW is not only looking to manufacture vehicles but also ensure presence across the entire ecosystem of EVs including batteries and components to bring down cost and widen its adoption.

The Group will invest ₹40,000 crore in a most advanced technology-based battery manufacturing project of 50 GWH capacity which will be the world’s largest single location project in the sector. The company will also set-up an OEM Plant for EVs and components in the same integrated complex.

But how will JSW deal with issues like the lack of charging infrastructure? Jindal cites the example of how public call offices (PCOs) made telephones accessible to the masses before mobile phones came in. “Every shopkeeper used to hang a telephone outside his shop for people to make calls. Similar solutions will emerge for charging electric cars,” Jindal said adding that his group company JSW Energy will also be partnering with a few start-ups to put up charging stations at major locations.

“We believe in scale and are going to churn the whole industry a lot and create some sort of a disruption in the industry,” he said.

When Maruti drove into India 40 years ago it changed the auto industry and brought in very efficient lightweight cars. The Ambassadors and the Fiats went into oblivion, he said. “I believe, with MG, we can recreate the same movement in the new energy vehicle space. That is why JSW, which is a commodity player with presence in steel, cement and energy, has come into this B2C consumer product,” he explains.