For JSW Steel, the target might be difficult but not insurmountable. It has been on an acquisition spree and plans to pump in ₹65,000 crore over the next three years to expand capacity. It has all the credentials: It has a compound annual growth rate (CAGR) of 16% from 2002 onwards, its capacity has jumped from 1.6 MTPA to 18 MTPA over this period, and it has acquired and turned around loss-making Monnet Ispat & Energy and Ispat Industries before merging them with parent company JSW Steel. The company has a unique acquisition strategy which ensures that even after the acquisition of loss-making firms like Monnet Ispat and Ispat Industries, its existing balance sheet is not overstretched. It puts the acquired unit in a special purpose vehicle and only after it becomes profitable is it merged with JSW Steel.

If there’s one person who can meet the company’s ambitious target, it’s Sajjan Jindal. He started his career in 1982 managing a small loss-making galvanised steel plant in Tarapur on the outskirts of Mumbai with an annual turnover of less than ₹9 crore and a loss of ₹3 crore—and eventually went on to build a sprawling empire. Despite the turmoil in the steel industry with many top steel makers in bankruptcy resolution, JSW Steel’s balance sheet looks healthy. In the past five years, its total income has jumped from ₹51,496 crore in FY14 to ₹70,148 crore in FY18 and profits from ₹451 crore to ₹6,214 crore. Its stock price too has leapt 170% in the past five years. It reported an Ebitda of ₹13,000 a tonne in the third quarter of FY19, second only to Tata Steel at around ₹16,000, a debt to equity ratio of 1:2.4, and a market capitalisation of ₹72,000 crore. And that’s when it has to import most of its raw material requirements like iron ore and coking coal.

Bolstered by higher import duties on steel, JSW Steel is on an expansion spree. Its capacity expansion will come from existing plants, greenfield projects, and overseas acquisitions. It will add nearly 5 MTPA to its Vijayanagar plant and another 5 MTPA in Dolvi, Maharashtra, while 3.5 MTPA will come from its acquisition of Bhushan Power & Steel. Then there are the greenfield projects—a 12 MTPA JSW Utkal plant in Odisha and another 10 MTPA plant in Chhattisgarh. It will add another 4 MTPA from its overseas plants. It exports nearly 12% of its total sales to 100 countries. “Inorganic growth has always been an integral part of our growth journey and will continue to explore strategic opportunities, both in the domestic and international markets,” says Jindal. But the expansion of the Dolvi steel plant, acquired from Ispat Industries in 2010, is of great importance to him because a port plant brings down logistics costs. “This expansion of the Dolvi plant to 10 MTPA in FY20 will make it the largest port-based plant in India with state-of-the-art facilities,” he says. Perhaps the only issue in JSW Steel’s balance sheet is its debt of ₹46,000 crore, which is likely to go up even further, once it fully acquires Bhushan Power & Steel. “The next two or three years will be a delicate balance for JSW Steel between sustainability and maintaining pole position in steel-making,” says Abhijit Mitra, an analyst at ICICI Securities. His fear stems from the fact that JSW will have to deal with an aggressive capex programme of ₹45,000 crore over the next three years, and another ₹20,000 crore for the acquisition of Bhushan Power & Steel, at a time when steel prices are coming down.