Bonds Of Steel

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On the afternoon of 18 February, a steady stream of guests made its way through the grounds of Jindal House on Prithviraj Road in New Delhi. At the mehndi ceremony of Tarini, Sajjan Jindal’s daughter — she was getting married the next day — people from across the spectrum of life came in through the gates: celebrities, public figures, family friends and relatives rubbed shoulders.

Savitri Jindal, the 61-year-old matriarch of the Jindal family, greeted and welcomed the guests while her sons, Prithviraj, Sajjan, Ratan and Naveen played hosts to groups of people on the lawns of the family mansion.

The third week of February had been very hectic for the entire family; the wedding was a huge affair with multiple ceremonies and functions. Throughout, the close ties between the four sons of the late O.P. Jindal — the patriarch who founded this industrial family — was evident. After lunch, Naveen Jindal, member of Parliament and vice-chairman of Jindal Steel and Power (JSPL), made a quick change into a suit and, carrying his shoes, headed to his car to go to a meeting of Parliament’s Public Accounts Committee, of which he is a member. The calls of duty and business, it seemed, were never far.

Now, another important date looms: it has been six years since O.P. Jindal died in a tragic helicopter crash on 31 March 2005.

The companies he founded and his sons ran — and still do — have grown rapidly. Their collective revenues are about Rs 60,000 crore. Separately and together, the companies are implementing a grand plan of going from being big in India to being big globally. At present though, they are still minnows globally.

In 2010, ArcelorMittal had revenues of $78 billion (about Rs 3.74 lakh crore) and crude steel production of 90.6 million tonne, representing approximately 8 per cent of world steel output. Tata Steel along with Corus recorded deliveries of 24 million tonne after considering the decline in demand because of global economic slowdown — the 2009-10 turnover was Rs 1,02,393 crore. After the ongoing expansions, the Jindal brothers will jointly have a 20 million tonne-capacity from the next financial year (2011-12). The group’s global ambition is evident from the recent deal in which Japanese steel giant JFE picked up 14.9 per cent stake in JSW Steel for Rs 4,800 crore.

Despite the identity of being part of the O.P. Jindal Group, each of the brothers runs an independent operation, a couple of them managing mini-conglomerates. Prithviraj, the eldest brother, heads Jindal SAW, and frequently fills the void left by their father’s demise. Sajjan, the second eldest, heads JSW Steel and JSW Energy while Ratan and Naveen run JSL Stainless and Jindal Steel and Power, respectively.

All of them are in the steel and power businesses, and two in cement. In some situations, they could even be business rivals, prompting a few to suggest a coming Jindal-versus-Jindal scenario. “JSW Energy (run by Sajjan) and Jindal Power (run by younger sibling Naveen) have started competing for selling power to states such as Rajasthan,” says an executive with a global bank. “They all have applied for mining licence in Afghanistan.”

Each brother also has ambitions on a big scale (see ‘From Big To Bigger’ and ‘Thinking Big’ on pages 40 and 42 respectively). All of them have children of their own who will succeed them and are being prepared for their roles (more on that a little later). Given the speed at which the Jindal businesses are expanding and growing, they could become large conglomerates that could end up becoming business rivals and creating separate identities. But among themselves, the brothers believe that family ties will not suffer or be strained in any way.

One Source, Many Rivers
O.P. Jindal, a farmer’s son from Nalwa near Hissar in Haryana, did not finish high school. As a young man, he wanted to become a bodybuilder, and later became a pehalwan (wrestler). Anil Dharker, in his book on O.P. Jindal, The Man Who Talked To Machines, writes that the young man’s parents indulged him when he took up wrestling. Once, his mother Chandrawati Devi told him, “Wrestle if you want, but don’t come home crying that you lost a fight.”



Even after he became an industrialist, O.P., as was called, showed the same spirit and courage, training his sons along the same lines. “When we entered the business, father gave us small businesses,” says Sajjan. “Then we expanded it and controlled and continued with it.” A well-thought out strategy helped O.P. avoid the family clashes often seen in business families.

First, the father entrusted the management responsibilities of each company to a different son. Second, he devised a stakeholding structure by which each of the four sons owns 20 per cent of the total promoter’s stake in each group company. Also, the person who controls the management gets another 20 per cent (they call this their father’s share).