Thursday, April 25, 2013

Can JSPL keep its global expansion plans on track?

Jindal Steel & Power Ltd. (JSPl) has reasons to cheer as it has been able to deliver growth in profitability for the past fiscal when the entire sector has been facing severe margin pressures. But in the midst of environmental and regulatory hurdles back home and an unfortunate debacle in Bolivia, can the company keep the investor sentiment bright? Ashish Kumar of B&E undertakes an insightful visit to the company's Raigarh plant and interacts with senior officials on how they plan to keep the growth story going
When you land on the airstrip of “Jindal Airport” inside the three million tonne per annum capacity integrated steel plant of JSPL at Raigarh, the first thing that strikes you about this once sleepy town in the state of Chhatisgarh is the visible abundance of yellow metal. And no, we don’t mean gold, but the numerous yellow coloured JCB machines and cranes that keep the town bustling 24/7, a sight unimaginable over two and a half decades ago.

As is the norm with industrial townships, the plant area stands out as an island of affluence relative to the surrounding area, and the company has painstakingly endeavoured to provide its employees with every possible facility. In fact, to further secure their commitment, the company provides stock options to all employees, from the topmost official in the plant to the driver who took us around the area. However, the influence of the company on the town is quite evident when you talk to the locals around, so much so that a sizeable number of them prefer to deposit their hard earned money with JSPL for safekeeping, rather than with the five odd bank branches in the area! While the Jindal Hotel in Raigarh has no relation to the group (just a case of clever branding), the town has a state of the art auditorium set up by the company, where locals can watch the latest movies. JSPL has also provided mobile healthcare vans, among other facilities, as a part of its drive to ensure harmonious relationships with the community there. So far, their land acquisition drive in the area has been successful (read: no major flare up, even though all locals haven’t accepted the compensation/R&R/employment terms), making it rare in a milieu wherein numerous projects have been stuck in land acquisition controversies.

However, there are some very serious stakeholder issues that JSPL hasn’t been able to maneuver its way through as well. It faces the ire of the Coal Ministry due to delayed development of the Jitpur coal block allocated to it in Jharkhand (along with 29 other companies who got coal mining blocks). Their proposed 5 million tonne per annum steel green field project in Jharkhand is stuck for quite sometime due to this. Moreover, while the company has taken several initiatives to minimise environmental degradation like making bricks and cement out fly ash and planting some 3 million trees (initiatives that were visible in and around their Raigarh plant), it has also come under close scrutiny of the environment ministry for beginning construction work in the non-forest area for the Angul steel plant in Odisha, before the forest area was cleared by the ministry. In addition, the National Green Tribunal cancelled the environmental clearance for their coal & washeries plant in Chhattisgarh, as it claims that the public hearing of the matter was not conducted in the right way. Land acquisition issues have similarly cropped up with regard to the Rs.350 billion steel plant project in the West Midnapore district in West Bengal. Commenting on the issues, N. A. Ansari, whole- time director and executive director, JSPL Raigarh laments, “Lack of clear cut policy measures has affected not just us but the whole sector. Regulations need to be practically feasible and consistent to reduce the environment of uncertainty.”


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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