Excl: JSW Group scion Parth Jindal on turnaround of US biz

Sajjan Jindal has never stayed away from making big bets. And as his son Parth Jindal completes almost four years in JSW Group, CNBC-TV18 caught up with the heir apparent of the JSW Group in his first-ever television interview. In an interview with Kritika Saxena, the Jindal scion spoke about the challenge behind modernising the US business while rubbishing rumours of a shutdown. Below is the verbatim transcript of Parth Jindal’s interview to Kritika Saxena on CNBC-TV18. Q: What is the roadmap for the turnaround of the US business? A: In order to turn it around we would need to pump in a significant amount of capital in capex to modernise the plant. The board has taken the view that JSW Steel, the money that we would spend in the US would be better spent in India.What I have done since I took over in 2012 was we changed the management completely. We got a new CEO in place who was a CEO of AK Steel before John Hritz. He has got a completely new management whether it is the Chief Operating Officer whether it is Technical Officers, everyone is completely new team.  We are trying to upgrade the facility to what it was built in the 60s to do. So, we have achieved that but if we want to actually turn it around if we actually want to start competing with the likes of US Steel and Nucor Corporation we would actually have to spend significant amount of capital to modernise.  So, right now as we speak we are talking to private equity firms, we are talking to strategic in the US to either do a management buyout to buyout the complete asset or to take a significant stake in the asset. So, that they can pump in capital, with that capital they will get an equity stake in the US business.  Q: How much capex is required right now? A: Roughly around USD 150 million. This is a four phase process, so initially we would need about USD 40 millions and that would grow to about USD 80 million in two years. With that USD 80 million this plant would start generating internal accruals and then in order to completely modernise you needed further USD 70 million.  Q: How long would it take for it to become profitable? A: It is a two year process. Once we place the order for the new equipment and once we modernise it, it will take two years to actually modernise the facility. Once we modernise the facility our cost, our conversion cost which is today quite high will drastically reduce. Today our conversion cost if it is X with this modernisation it would drop by 40 percent. That 40 percent is where we would make the margin.  We have over eight-nine different parties who are showing interest. Some are interested in a complete buyout. Others are interested only if JSW continues with minority or a majority stake. So, which ever offer we get and I have been in associated with this plant for so long so my dream is to see it turnaround.  Q: Shutdown is not an option? A: Shutdown is not an option. There is no need to shut down because we are anyway able to breakeven or do slightly better right now. That is only because of the new management.