JINDAL FAMILY

Steely Jindals' rise to power: How the family went from bucketmakers to Rs 17,500 crore business titans
By MAIL TODAY BUREAU
PUBLISHED: 22:30 GMT, 13 June 2013 | UPDATED: 22:30 GMT, 13 June
2013
Before it became synonymous with one of the biggest scams in India's
history, the Jindal group was a business conglomerate that prided itself on its
humble roots.
The Jindal empire was built from scratch by the late Om Prakash Jindal, who
was born to a farmer at Haryana's Nalwa village on August 7, 1930. He took
his first step into the world of business at the age of 22, when he set up a
small bucket-manufacturing unit in Hisar. He followed it up by establishing
Jindal India Limited, a pipe-production unit, in 1964.
Five years later, the Jindal patriarch set up his first big factory in then
Calcutta, and thus began the illustrious history of the group that today
boasts of a total worth of Rs 17,500 crore.

MP Naveen Jindal (right), seen here with his mother Savitri and
other family members, is likely to be quizzed by the CBI
Over the years, Jindal went on to become a successful politician, winning
three terms as a member of the Haryana assembly and representing
Kurukshetra in the 11th Lok Sabha. He was known to liberally tap into his
personal wealth to fund various welfare projects also creating thousands of
jobs in backward areas and building schools and hospitals. His philanthropy
played no small part in steeling his legacy, so to speak.

Jindal House at Mumbai's Walkeshwar Road

By 1997, with Jindal devoting more and more time to politics, and the
empire's geographical expanse putting a strain on the management, plans
began to be made to divide the company among his four sons - Prithviraj,
Sajjan, Ratan and Naveen.
The eldest, Prithviraj, 46 years old at the time, took over SAW Pipes Ltd, the
pipes and tubes division which clocked sales of Rs 501.4 crore during the
year ending June 1996.
Sajjan, then 41, assumed the charge of mild steel-maker Jindal Iron and Steel
Co. (JISCO), Jindal Vijaynagar Steel Ltd (JVSL) - an ambitious Rs 4,000-crore
project for the manufacture of hot rolled coils, Jindal Tractebel - the 50:50
joint venture for power with Tractebel of Belgium, and Jindal Praxair -- a joint
venture for JVSL's oxygen plant in collaboration with US industrial gas major
Praxair.
An empire
Ratan, who at 38 was the managing director of Jindal Strips Ltd, was given
complete charge of Jindal Stainless Limited (JSL), the Rs 1,000-crore-plus
flagship company of the group specialising in the manufacture of stainless

steel strips and the sole producer of razor blade steel in the country. The
Jindal Strips sponge iron division at Raigarh, managed by Naveen Jindal who
was 27 at the time, was hived off as a separate company under his charge.
Naveen, a University of Texas Dallas alumnus, also assumed control of Jindal
Power, the group's power venture, which owns, among others, the 1,000 MW
coal-based thermal power project with Genting group of Malaysia. He was
also made in charge of the captive power plant at the Raigarh unit.
The formal division of assets began with Sun Investments, which has an
equity holding in most group ventures and in which all members of the Jindal
family have a stake.
Eight years later, in 2005, the patriarch's illustrious journey was cut short by
a helicopter crash, which killed Jindal at the age of 74. Following his death,
most of his assets were transferred to his wife, Savitri Jindal, who now chairs
the steel and power conglomerate that is O.P. Jindal Group.
Eight years after his death, Jindal's family figures on the Forbes list of India's
10 richest families with assets to the tune of $7.6 billion (as of March 2013).
(Inputs from Vikas Kahol)

From youth icon to political opportunist

Business and politics are inextricably linked in the life of Naveen Jindal, the
43-year-old Congress MP from Kurukshetra and the chairman of Jindal Steel
and Power Limited. Few would dispute that the high point in Jindal's political
career came in January 23, 2004, when he succeeded in getting the Supreme
Court to agree to get the Flag Code of India amended, providing every citizen
the right to fly the Tricolour.
However, even this has a business connection. The seed of this event was
sown way back in 1992 when Jindal was just 22 years old. Having just
returned from the United States after completing his education, Jindal was an
eccentric patriot of the flag-flying variety and insisted on displaying the
Tricolour at his factory premises in Raigarh, in the mineral-rich region of
central India.

Jindal Lawns in Delhi is another of the family's assets

Needless to say, it got him into trouble with the local authorities and that is
how Jindal embarked upon a prolonged legal battle.
Over two decades later, Jindal is in trouble with the law again. The difference
this time is that the public perception is not on Jindal's side. The same
person, who in 2004 was seen as a youth icon imbued with national pride, is
now seen as a symbol of crony capitalism in the country.
Between 2006-07 and 2012-13, the revenue from the companies controlled
by Jindal has increased over five-fold (see box). At the heart of this windfall
have been the natural resources in the country, which the CBI believes were
allocated to Jindal because of his political connections. It is perhaps no
coincidence that the dramatic rise in Jindal's fortune coincides with the years
the Congress-led UPA has been in power.
The various entities controlled by the Jindal family, the JSPL in particular,
have by far been the largest beneficiaries of the coal block allocations by the
Union government. Between 2004 and 2009, the Jindals have been allocated
coal blocks with reserves to the tune of 2,660 million metric tonnes.
According to estimates, the difference between the Jindals and the next
biggest beneficiary of the coal block allotments is in excess of a whopping
1,000 million metric tonnes.
BJP MP Hansraj Ahir, who blew the lid off the coal scam, claims the Congress
has favoured Jindal as he is one of their own. But interestingly, the Jindal
group was given blocks even during the NDA and United Front governments.
But it was under the UPA that the group benefitted the most.

The family's residence in the Capital, 6, Prithviraj Road, was

searched by the CBI as part of the coal block allocation probe

The changing face of family business splits

Ranju Sarkar | New Delhi
August 31, 2010 Last Updated at 00:52 IST
Succession planning is the new mantra by which traditional groups are
warding off territorial disputes.
The Jindals did it. The Munjals followed. Now, the Goenkasare following
suit. Indian business families are amicably carving up their empires among
the next generation, and yet retaining a common group identity which
may provide them some leverage with lenders.
It isnt an easy process. Rama Prasad Goenka, Indias first takeover tycoon,
for instance, split his group between sonsHarsh and Sanjiv. The brothers are
now snipping the complex web of shareholdings in each others companies
so that they have clear ownership of the businesses they manage.

In 2009, the OP Jindal Group did the same, untangling the shareholding
threads of 30 investment firms to create four holding companies. The
promoters stake in each new holding company was split five equal ways
among the brothers Prithviraj, Sajjan, Ratan, and Naveen and their
mother, Savitri Devi, who is chairperson of the group. Each brother will
control one holding company and eventually inherit Savitri Devis stake,
making him the largest shareholder with 40 per cent ownership.
Dwijendra Tripathi, a former professor at IIM-Ahmedabad and an eminent
business historian, feels more splits are on the horizon as families realise it is
better to divide assets amiably rather than wait for the acrimony that
marked break-ups between 1979 and 1999. The days of the joint family are
over. Families realise that if they cant manage jointly, it is better to split. The
joint family structure of business management is outdated, he says.
Tripathi sees these amiable splits more as exercises in succession planning,
which was missing earlier. Barring one (the Thapars), the 30-odd splits
between 1979 and 1989 were all characterised by rancour. An obvious case
in point: the Ambanis. Families now realise the value of succession
planning, adds Tripathi.
In June, the Munjals disentangled their cross-holdings in more than 20 group
companies in a manner that each faction of the family received ownership of
the businesses they managed. Hero Honda Motors, the groups flagship, is
owned and managed by the Brijmohan Lall Munjal family. Sons Pawan Kant,
Sunil Kant, Suman Kant and the late Raman Kants family will between them
hold the groups 26 per cent stake in the joint venture with Japans Honda.
Om Prakash Munjal and family now control and manage Hero Cycles. The
sons of BM Munjals brother Satyanand Munjal have Majestic Auto, Highway
Cycle, Munjal Auto and Munjal Showa. Ashok Munjal, the son of late
Dayanand Munjal, the eldest of the first generation, got Sunbeam Auto while
his brother, Vijay, received Hero Exports. Sunil Kant Munjal, the groups
spokesman, was not available for comment.
The Jindals, the Munjals and the Goenkas arent the first to seek a united
front by cordially carving up their business realms. There are others like the
Shrirams, the Thapars and the Burmans that have followed a similar course
and successfully managed the transition.
Business historian Gita Piramal believes there are two aspects to this trend:
cultural and legal. Some groups have had a culture of working this way: the
Goenkas, Bajaj, Munjals, Muthiahs, and Mariwalas. Theres an historical

context to the legacy of cross-holdings, over which the business families had
no control, says Piramal.
This has its genesis in important legislation. Hard though it may be to
believe, by 1930, India was the worlds tenth most industrious nation. But
Indias capital markets were small. The year 1970 was a threshold year for
Indian industry, when the managing agency system a crucial source of
wealth for business families was abolished. This considerably reduced the
wealth that went to promoters. A year before that, the Monopolies and
Restrictive Trade Practices (MRTP) Act was introduced.
The need for capital, and the MRTP Act, which forced companies with assets
of Rs 100 crore to seek government permission to set up new units or
expand existing ones, often forced promoters to set up multiple companies
and control them through cross-holdings. Groups like Reliance and Bharti,
which started or grew in the 1980s, have a different structure and did not
need complex cross-holdings. Thats why they have fared better than older
business families, points out Piramal.
Family splits are a post-Independence phenomenon. Before that, a joint
family was the norm and the only source of capital for the relatively small
companies. Even if there was a split, people kept it secret as there was
social stigma attached to it. But there was nothing like succession planning
in Indian business families, says Tripathi.
The social, economic and legal forces of post-Independent India worked
counter to the business families. When differences arose, they led to splits.
Take the MRTP Act. Several younger members of business families began to
launch their own independent companies to skirt the MRTP Act. When the
managing agency system was abolished, companies needed to have salaried
CMDs assisted by a board. But nothing really changed in practice: people
that headed the erstwhile managing agency became the chairman and
managing director. But social forces had become potent, and some families
began to seek autonomy.
As differences came to the fore, it led to family splits. The Dalmia-Sahu Jain
(early 1950s), Goenka (1958-60), Singhania (1979) and Mafatlal (1979)
divisions were all acrimonious. In several cases (such as the Dalmias), the
splits were so acrimonious that nobody knows even today what happened or
in which year the split actually took place, says Tripathi.

Up until 2000, the only case of structured succession planning was seen in
the Thapar Group, when Karamchand Thapar in his lifetime identified one of
his four sons, Lalit Mohan Thapar, to succeed him.
Experts feel the current spate of amiable splits is a welcome trend. The joint
families had their virtues. They were largely anaemic to innovation,
expansion, and rewarding merit. These amiable splits will induce
managements to become more professional, even if a family member is still
at the helm, says Tripathi.

Full transcript: Your Call with Naveen Jindal

All India | NDTV.com | Updated: September 30, 2012 22:11 IST

NDTV: Good evening and welcome to Your Call. On the show tonight,
businessman- politician Naveen Jindal. He's been in the eye of storm over
Coal-gate, but here tonight to answer all questions. Naveen Jindal thanks for
coming in. I introduced you as a businessman-politician, at least these two,
businessman and politician, nowadays in India seem to be viewed with
suspicion. Are you dismayed by that or you think there is a grain of truth in
that?
Naveen Jindal: People who do not understand this, they are the ones who
talk like this, because our Parliament consists of people from all walks of life.
You could be a farmer and be in Parliament, you could be a teacher and be in
Parliament, you could be a lawyer and be in Parliament, you could be an
industrialist and be in Parliament. So when people from all walks of life come

to Parliament, to the greatest temple of our democracy, that's how it

becomes richer, so the people from various walks of life can add to it from
their experience. So I see it's a very good thing and my experience of
business, of setting up industries, I think I have brought a lot to the table
NDTV: The core of the issue however, especially in the recent controversy
over Coal-gate, is about whether politicians influenced or furthered their own
business interest in allocation of coal blocks, and that's what the Opposition
has accused you of. Do you feel that the reason in essence is a conflict of
interest because you are a Congress MP? Did the government favour you?
Naveen Jindal: Not at all, I don't think the government has favoured me at
all, ever. All the coal blocks that we have been allocated have been purely on
merit. I joined politics only in 2004, so before 2004 also our companies, our
various companies, have been allocated coal blocks.
NDTV: So your Father was in politics?
Naveen Jindal: Yes, my Father also came into politics much later, and then
when he came into politics he was hardly doing any business, he was mostly
involved in politics because he only joined politics when he was 61 years of
age. So that time he was spending more and more time in politics. So
whatever we have been allocated our industries are running for more than 4
decades now. We have an extremely good track record of setting up
industries, of making successful projects, so whatever coal blocks have been
given I think, if you see our track record of developing them, I think it would
be better than anyone else in the country.
NDTV: Let me just go across to what actually started this controversy,
because when the CAG report came out, though some of your blocks were
named, you weren't the target; but the attacked was stepped up by Sushma
Swaraj. Let's just hear what she said. It's interesting because Sushma Swaraj,
this only came out a few weeks after the CAG report actually came out, and
many said that the Jindal's have also benefited under the NDA government
also, under the Chhattisgarh state government, which is run by the BJP, so

why target you. But she has made the point that the Jindal's and your
company had benefited, one third of the current coal blocks allocated are
with you. No conflict of interest, nothing to do with you being a Congress MP?
Naveen Jindal: Not at all. And I do not agree with this one third. If you see
overall, coal blocks that have been given and the amount of coal that has
been given, and it come to around 5%. So what she is saying one third, it
would come to one eighteenth or something, okay, I think that's not
important.
NDTV: Highest block reserved by a private operator?
Naveen Jindal: Yes, but that's not important. You should also see that
correspondingly what is the investment that one has promised, what is the
investment that one is supposed to make to get use out of those coal blocks.
If we do not set up, these coal blocks have not been given to just sell coal.
Right. For every coal block, if it's a large coal block, say there is a largest coal
block is of 1500 million tonnes, 1.5 million tonnes for converting coal to
petrol. So to make that happen one has to invest 60,000 crores. So if we do
not invest 60,000 crores we cannot do anything with that project. So people
forget that the more coal blocks you have taken is also of much more of a
responsibility to make them happen.
NDTV: But the big questions on the coal blocks that you got, let's for
instance take the Jeetpur coal block mentioned in the CAG report, and in fact
first recommended by the IMG to actually de-allocate it from you, and then it
came to deducting a bank guarantee. So in that sense there clearly was
something, which didn't work out there?
Naveen Jindal: Okay, Jeetpur. I have been there a couple of times. This is in
Jharkhand. There is a special Act over there, it's called Santhal Pragna
Tenancy Act, over there you cannot buy any land from the people directly
because most of the land is Aadivasi land. You have to go through the
government and this is the first case probably in the country where 100% of
the people have given consent that they want, they are happy to sell their

land, so to get all these consents, to get all the people on board it's not easy.
You know it is extremely challenging to make any of these projects happen,
and why IMG? I would presume that before they have recommended
cancellation because they had information which was one year old, so it is
their own coal controller who went there, who saw and when they saw what
all has happened in that one year, because they were referring to one year
old reports, they realised that this company has done more work than
anyone else in this region. So that is why and I feel even the bank
guarantees that they have, because we do not have any clear cut
communication from them, but from the press reports, I think even that's
very unfair, because if they prove that our company has delayed the project
by even 1 day I would say deduct all the bank guarantees. But if it's not our
fault if the fault lies with all the different permissions. It takes so much time
to get different permissions from the government, from the State
government, from the Central government, it's not our fault. It's extremely
challenging and in fact people, not only our company, whichever companies
are working in these areas and have done good work they have to be
rewarded. These are the companies, which are creating wealth for the
country and when a senior leader like Shrimati Swaraj says Naveen Jindal, it
is not Naveen Jindal, Naveen Jindal is not the same as Jindal's Steel and
Power Llimited or Jindal Power Limited. These companies are institutions,
where thousands of people are working. It is all team efforts. I think it is
insulting those thousands of people engaged in their hard work and creating
wealth for the country when they just blame it on individual.
NDTV: No but Mr Jindal, the argument would be that the rules may not have
been there, that is the argument, that government's rules let some
companies, let private companies benefit. The Supreme Court judgement
also made the point that you can't have one set of people benefiting at the
cost of others. One argument would be about your plant in Chhattisgarh,
where they say you have got cheap coal or you have got a captive block and
you then sold power at market rates, so that undercuts the entire UPA
government's defence that this was done to provide cheap power. How does
it provide cheap power?

Naveen Jindal: Okay, let me clarify this to you Sonia. Firstly, we did not get
any cheap coal. Okay.
NDTV: Free coal?
Naveen Jindal: No, no nothing is free. There is nothing free in this life, okay.
We got a coal block, extremely difficult coal block. You could not even get
there. There was no road even to get there. It was not even sub blocked. We
took the risk to go there to develop that coal block. It took almost a decade
to develop the first coal block.
NDTV: But Mr Jindal, you did this with profit. You are a businessman so
obviously you presumed there would be a profit.
Naveen Jindal: Obviously, every company, every shop, every person, even
when they are doing agriculture they do it for profit. Profit is not a bad thing
if it is done well, if it is done in a legal way and whatever profit one makes
one pays taxes on it. Also nobody has made a charge that we have paid less
taxes. So we have developed the coal block, which nobody had any plans to
develop, and based on that coal block, if we spend 5,000 crore to set up a
thousand megawatt power project. Okay. And where thousands of people are
working, a thousand megawatt is coming into the country, so it is something,
which has to be appreciated. And now the coal cost, you said cheap coal, a
lot of people say we have got cheap coal. No, our coal cost is very similar to
the cost of coal from Coal India. If we had brought the coal from coal India I
would cost say Rs. 700, our coal also costs 700 rupees, so where is it cheap?
Now why the company makes money? It is because we did not set up the
project 1500km away, we set it up next to the mines so that we could
transport the coal from our conveyer belt and save on the transportation
cost. We set up the project with lowest capital cost, okay. We are running the
plant with 97% plant load factor that leads to the efficiency. And at the time
we wanted to sign long term PPS, nobody was coming forward to sign PPS so
we took the risk and set up the project, spending 5,000 crores. And when we
came into generation, at that time government had a policy, 2003 Electricity
Act was passed. 2005 Power Policy had come out which said that 15% of the

power should be merchant power, okay. Merchant power to deepen,

strengthen the power markets. So now at that time the power was selling
at Rs. 5 when we came into the market. If the market price is Rs. 5, I can't
say sell it for Rs. 4 and then over the years from Rs. 5 it has come to now
level of Rs. 3. So many times we have to keep the plant closed. Also so
nobody sheds a tear when your plant is closed or when we don't have coal,
when we have a problem, so whatever we have done we have in these 5-6
years. Paid almost 2500 crores in terms of royalties, taxes to the state
government, central government, so it is a successful case, which has
inspired hundreds of people to set up power projects.
NDTV: Let me get in Mohammed Salim of the CPI(M) who's on the phone
line. Mohammed Salim, Naveen Jindal is making a strong defence of the
government's coal policy and why his company got allocations. Go ahead
with your questions to him Sir.
Mohammed Salim: I have no dispute personally with Mr Naveen Jindal, but
the question is from which angle he was looking into the issue now? As an
entrepreneur or as an industrialist he is seeing from one angle and obviously
his motto is how to make profit. There's not question at all, but as people of
Chhattisgarh and as one, after the Coal Nationalisation, the Act is still there,
the Act of Parliament, so these natural resources are of the nation. So when
the government decides to hand it over to the private companies, these
scarce natural resources, which are limited. Also so why, without changing
this Act, this has been done behind the back. Secondly, you said auction is
not the only way of course, it is a good way, then you decided on the price,
saying that if you give this cheaper than if you pass on to the consumer
ultimately. But now you are saying it will benefit the company, but not the
people. So whole philosophy of this trickle down effect, that GDP will grow,
production will grow, company will be beneficiary, and then poor people, who
are waiting down the line they will get. And also after a decade also they
have not got it. So the whole philosophy is wrong, in that case some people
have benefited out of the natural resources and most of the people are
suffering.

NDTV: Mr Salim thanks for that. I'm going to get Naveen to respond to that,
but also Mr Jindal, questions sent in by our viewers. They are making the
point that you talked about the profit and the risk that you also invested in a
sense going here. But what about issues like whether the sale of power at
merchant rates contributed to the JSPL stock price going up from 30 in 2005
to 720 in 2011? Subbash Iyer has written in and asking that obviously this
was because of the coal block allocations record. This was seen as a windfall,
seen as a profitable venture not entirely so risk based as you are pointing
out, but obviously the market and your market cap shows that this was seen
as a win-win for Jindals, not for the people, as Mr Mohammed Salim points
out.
Naveen Jindal: Okay, we do not make only power, we make steel. So now
Mr Iyer or somebody else can also blame that now you are making steel also
efficiently. Why are you using this process, why are you using this
technology? So I do not want to get into these kinds of arguments. What we
have done we have done extremely efficiently, properly, following all the
rules of the land and made a successful case. And I have explained to you
that power prices, when we came into generation in 2007-08, they were at a
level of 5 rupees in the merchant market. Now the same prices have come
from Rs. 5 to Rs. 3 level. And if more projects come up, we all know that
there are hundreds of power projects in the country which are languishing,
which are getting delayed, which do not have coal. So if their problems are
solved, if supply side constraints are removed and the generation increases,
automatically power prices would further go down. And I must add in all this
we are also giving power to Chhattisgarh Electricity Board, even at time that
was given around a level of Rs. 3. We also set up an industrialist estate in
Chhattisgarh where we are supplying power at Rs. 2, we were supplying
at Rs. 2:50p at that time. So nobody sees the thing in totality. So people just
like to find fault at you and just try to harp on that, so I say let us have a
positive outlook towards these things and we should see things in totality.
Overall if you will see, you will realise all these projects, which have all these
coal blocks, have been allocated to different companies. It has definitely
added to our GDP, definitely added to our prosperity and definitely added to
the development. If you actually go and see where these coal blocks have

been developed, how the roads have come up, how the towns have come up,
how the schools have come up, how those villages around those mines have
developed and benefited from this, I'm sure all this criticism you will not
have.
NDTV: Naveen Jindal, how can you say that when the facts are, so many, in
fact 98% of the coal blocks allocated to the private sector haven't begun?
Where is the UPA argument of, I think it was 2020 or think 2012, cheap
power for all? Where has that happened?
Naveen Jindal: Sonia let me tell you this has been going on since 1993. I
believe since 1993 around 20% of them, out of 200 coal blocks that have
been allocated, around 40 of them have started and many of them are
nearing production. They are going to start very soon, it takes a very long
time; it's a very difficult process. That's why I said companies who are
engaged in developing these coal blocks they are doing a very good job, they
are doing a great service to the country, so they need encouragement, they
need support because it is extremely difficult to develop these blocks. Only if
we develop these blocks and do something with them will we be creating
wealth for the nation, so these companies need support and encouragement
nor criticism.
NDTV: Shaina NC joins us now from the BJP. Shaina NC you have heard Mr
Naveen Jindal making the point we need support not criticism and one
interesting aspect of course is that now the CBI will also be looking at the
allocations from the NDA government's time onwards, and in a sense Jindal
Company also got allocations under the NDA government. So why was it that
he was all right then and suddenly politically volatile because he's in the
Congress now? Go ahead Shaina.
Shaina NC: Sonia, I think the two crucial questions here is no denying that
development is a must and it generates livelihood, jobs etc. great. But as Mr
Jindal said that profit is not a bad word; well let me say that is the loss for the
nation, correct. In his opinion random allocations that have been given to
random people when there was an option to having a tender process or an

auction process. Do you think this is bad policy of the government and
second I want to ask, as a youth leader, is it actually profitable for him to be
a politician or is it profitable to the country? Which is his priority?
Naveen Jindal: Hi Shaina, good to hear from you. Okay, firstly, the last
question first, is it profitable for me to be in politics? No I don't think so, I
don't think it is profitable for me to be in politics. I'm in politics at the cost of
business and I do this because ...
NDTV: Your balance sheet doesn't show that.
Naveen Jindal: Okay, well I'm sure if I was not doing this maybe I would be
doing even better, because I would be giving lot more attention to my work.
But I want to give the best years of my life in serving the country and I feel
that I can do a lot through being in politics, b eing in Parliament. Now
second question that she asked was regarding the nation, it is no loss to the
nation if we, over the last five years like I have said since the coal block has
started, if we contributed 2500 crore rupees in form of various taxes. How is
it loss to the nation? If thousands of people are working in the company and
if 1000 megawatt has been going into the country, I mean we take pride in
lighting up the nation, how is it loss to the country? If that coal remained
underground that would have been loss to the country.
Shaina NC: Well clearly the beneficiary here seems to be Naveen Jindal and
his group and having said that I don't want to turbulise this debate. I have
only posed this question, which is that is this a notional loss for the country
or is this a genuine loss for the nation? And the other being that when you
are in the public life politics is this sometime an opportunity that you may
have wanted to take, but you need to restrain if you are in a position of
power. So in that light I ask the question whether it's profitable to be a
politician today?
Naveen Jindal: Okay. Firstly, I would like to answer to Shaina that it is not a
notional loss to the country. It has been a genuine gain to the country for
setting up all these projects and for making investments.

NDTV: So our Constitutional auditor has got it all wrong?

Naveen Jindal: He has got it completely wrong. I can explain it to you if you
give me time, I can explain he has got it completely wrong. Secondly, what is
said about the Chief Minister writing letter to the government, you know so
much is said about this, that Orissa Chief Minister is writing a letter, so if we
were going to invest 50,000 crores in the state of Orissa, where more than
20,000 people are going to get employment, we can't expect Chief Minister
to write a letter to the government, so what is the big deal. Every Chief
Minister writes letters to the government in the interest of their development
of the states, so what's wrong with that and we are writing so much about it
NDTV: You wrote to the Prime Minister as well for the coal block allocation.
Isn't that the conflict of interest that Shaina NC is talking about?

Naveen Jindal: No I wrote as Managing Director, as Chairman of company

to the Prime Minister. So what's wrong with that?
NDTV: But you are also MP under him.
Naveen Jindal: Doesn't matter and whatever I have written he has not done
anything about it. Did that change any decision? I can ask, if I had not
written to him, if I had just spoken to him, that would be okay, because I
quoted in writing giving the facts. What has he said? For necessary action,
what was the action? They did not think it was okay they didn't do it. All
right. So why should I not be able to say, I should be able to say what I want
to say to you or to the Prime Minister of the country, and then you, in your
judgement, if you feel that it deserves merit you do it. If you don't want to do
it you don't do it so why this?
NDTV: We have seen the records of the private sector development for
reasons, which you have pointed out, but others dispute that has been
actual. I mean in that sense Coal India still provides over 90% of the coal

production and the argument that why Coal India had to go to Mozambique
for blocks when companies like yours have got blocks right here?
Naveen Jindal: Coal India has gone to Mozambique and they have got very
large blocks with billions of tons of coal in them. Did they have to go through
any auction? Our company also has got very large coal block in Mozambique,
the government is very keen that please come and invest in our state and
when you go to those countries they welcome you. They thank you for
making the investment. Does anybody welcome you in India? Does anybody
thank you for investments in India?
NDTV: Is it opposite?
Naveen Jindal: Of course it is like that all the time. Nobody says oh wow
Naveen you did a great job, you developed something and see I'm nobody
it's all teamwork at our company, with thousands of people who have worked
hard. You know you have to go and see how hard they have worked to make
these things a reality. Now one should really appreciate that effort, that this
has come to a reality you know, the coal block is working, we are taking out
coal, we are paying royalties, we are generating power, we have spent
thousands of crores.
NDTV: But not cheap power.
Naveen Jindal: It is cheap power, Rs. 3. You are not getting power atRs. 3
in your house.
NDTV: You are giving it at market rate and that is an issue, which you will be
dogged by your critical opponents. But let's go across to some young people
from Bangalore who have some questions to ask you. Go ahead.
Student: Actually the thing that you said about studies are pretty good, but
in studies we have, studies one fundamental fact in business management.
Suppose if I'm a buyer of certain commodity, in this case I would like to take
power, if I'm a buyer of power I will be looking for the seller who are going to
sell me power at the lowest possible price. But Jindal Power Limited had

differed all these theories because you have quoted power at the highest
price and you have gained highest profit in the market. So can you tell me
how JPL has managed to pull it off in such competitive world?
Naveen Jindal: Sure Shitij, I will be able to tell you very happily. Every time,
firstly, you have got it all wrong, every time we have sold power, our
customers have brought from us because at that point we are the cheapest,
only then do they buy power from us. And secondly as far as a company
making profit it's like saying if you start blaming Warren Buffett, oh he
bought cheap shares and sold them expensive that's why he made money,
so you don't hold that against him. Similarly, we, through our efficient
operation, we don't waste any resources. We are very efficient player. We
produce power like I said and there are various reasons why the company is
making profits. Today there are many projects where the cost of generation is
high but we, because of our efficiency which I explained earlier, because of
lower transportation cost, high plant load factor, lower capital cost of the
project, we are doing this and when we are selling in the power exchange or
even when we are selling to state governments on short term or medium
term basis, we are able to sell only when we are the lowest. so you are
charged that we are selling expensive power is completely wrong. All are
customers they are buying because we are the cheapest supplier to them.
Student: One more thing that Lanco and NTPC they were supplying power
even at the lower price than Jindal Power Limited, then how come they are
eating flies and you are enjoying the hugest profit in this industry.
Naveen Jindal: Why don't you ask then that why are they eating flies? I
cannot speak for them. I have explained! So would you much rather be Jindal
Power or you much rather be those companies which you named? If you
were running it what would you like to be?
Student: Sir, as being a management student we have been listening from
our faculty and also listening from our media that you are the highest paid
CEO, for two successive years, Sir so it's pretty amazing and you are doing
really good in it. So we just management students want to know of some

suggestions from your side, like what we can do the basic principles or the
key roles we should follow to reach your height?
Naveen Jindal: Well I think you should do, first of all when you are studying
you should study from the point of view of learning, not just from the view of
passing your exams. You should work hard try to actually gain knowledge
while you are studying and then wherever, whatever job you do, you should
give your best efforts. All we can do is put in our best efforts and leave the
result to the God and hopefully you will do even better than me.
NDTV: An interesting aspect he talked about your pay package, 73 crores,
highest paid CEO in the country. Why is it interesting? Because your Prime
Minister Manmohan Singh just a year or two ago said that CEOs must be
careful of the sizes of their pay packages. You don't see a conflict there?
Naveen Jindal: My pay package is decided by the Board of Directors. My
pay package is approved, mine and every other Directors' pay package is
approved by our shareholders in the annual general meeting. So if my
shareholders and my Board give me some certain commission and
something and the profit of that company is high and then if you see, I'm
sorry to beat my own drum, but a few months back a report had come in
business today, Harvard Business Review surveyed a period of 15 years,
from 1995-2011, so they rated me as the best CEO of the country for a 15
year period and there are many such reports.
NDTV: But the Prime Minister talked of setting an example.
Naveen Jindal: One second Sonia, I also want to tell you, if you see and
compare, I'm getting 2% of the profits as commission, as my remuneration
package, so you are allowed up to 5%. So I'm not getting even half of what is
allowed by the Company Law Board and there are many people who are
getting 5% and there are many people who are getting 10%, 11% of the net
profits. So nobody goes deep into the comparison, they just find figures and
just pounce on that, so everything is relative. You have to see what
percentage I'm getting of my profits, what is somebody else getting of their

profits, you will find mine is among the lowest.

NDTV: Let's just go across Chandigarh, the capital of Haryana, also of course
where you are a politician from. Let's go across Chandigarh and hear
questions from them.
Question 1: I want to ask that we are in a country we boast about our
progress in IT sector. Mujhe yeh poochna hai ki jis countrymein hum IT ki
progress ho rahi hai vahan women ko hum buri tarah treat kar rahe hai. I
want to ask you that if your daughter wears skirts, jeans or western clothes,
any of the western clothes so will you object, since you are in the support of
khap panchayat? So this is my question to you.
NDTV: Naveen Jindal that was a big controversy when you supported khap
panchayat. You wrote that letter for supporting Hindu traditions. Then you
see khaps who say don't wear jeans to young girls. Go ahead what would you
tell Ritika?
Naveen Jindal: I would tell Ritika that I have a 14 year old daughter who
wears skirts, who wears shorts and looks very pretty wearing all those. I'm a
very proud father and so does my wife wear, my wife also wears skirts,
shorts and you know whatever, so she also looks very pretty and I'm very
proud of that and no organisation does everything bad or good. I supported
the only good deeds done by khap panchatyats. In the past I have never
supported any of the wrong doings of any of the khap panchayat. Khap
panchayat has no business to tell anybody as to what they should wear and
to what they should do. I have never supported that, but it's unfortunate that
media, I must blame you Sonia, not you but media in general for
sensationalising something, and not putting the fact in the right perspective.
So let me clarify that I do not support any wrong doings of any khap
panchayat
NDTV: Naveen Jindal thank you so much for coming in, taking all the
questions and ending with a smile on your face. Thanks so much for joining,
thank you.

Jindal family plans foundation to protect interests of gen-next

Ramsurya Mamidenna, Hindustan Times Mumbai, December 08, 2014
First Published: 23:36 IST(8/12/2014) | Last Updated: 23:40 IST(8/12/2014)

The $15-billion (Rs 92,745-crore) OP Jindal group is exploring options of

creating a family foundation fund, which will ensure continuity for nextgeneration members and protect family interests and shareholdings in
various companies housed in the steel-to-power conglomerate.
The foundation, the contours of which are still being worked out, will have a
corpus to which all the four Jindal brothers Prithviraj, Sajjan, Ratan and
Naveen will contribute equally, and could initially be in the range
of Rs. 1,000 to Rs. 1,500 crore. A part of the corpus may be used to lend to
troubled companies within the group, people familiar with the plans said.
While such a foundation is not new in a family-run Indian business house, it is
significant for the Jindal family, as a family charter, drawn up by late
patriarch OP Jindal, is in existence. It ensures that the four brothers have
independent businesses under the overall family umbrella, while each has a
minority equity stake in the others companies.
While the charter binds the previous generation, the foundation will take
care of the next generation and ensure that their interests are not hampered
by future events, said one person who asked not to be named. Other
objectives of the foundation would include consolidation of shareholdings in
various group companies, providing capital to start new businesses for
younger family members and also contributing growth capital to existing
family businesses.
Each familys holding will be in the form of mezzanine equity preference
shares but with voting rights, where the rate of returns will be lower than
market rates. About half of the corpus of the foundation will be used to
finance business plans within the family.
Members of the OP Jindal family did not comment for this story.
The group, founded by late parliamentarian OP Jindal, has many companies
of which the five main are Jindal Saw (managed by Prithviraj Jindal), JSW
Steel, JSW Energy (Sajjan Jindal), Jindal Stainless (Ratan Jindal) and Jindal
Steel & Power (Naveen Jindal).

Among these, JSW Steel and JSW Energy currently have the highest
combined market capitalisation of about Rs. 44,000 crore (as on December
8) while Jindal Stainless has the least of Rs. 666 crore.
Under the old charter, each brother had a shareholding in others companies
for example, Sajjan and Naveen Jindal separately hold 0.01% stake each in
Ratan Jindals Jindal Stainless. The children also have shareholding in each of
the group companies Parth Jindal (son of Sajjan Jindal) and Sminu Jindal
(daughter of Prithviraj Jindal) own 0.01% and 0.02% in Jindal Stainless
respectively.
At present, members of existing promoter group can exercise their right on
shares of other group companies, but this mechanism may not be there for
the children. The foundation is essentially a safety net, said Sunil Shah,
founder, Evergreen Family Advisors. OP Jindal was a man of great vision and
what he put down in the charter was much ahead of its time, said Shah,
who has been involved in preparing family constitutions for many large
Indian business groups. This foundation will safeguard in case any member
of the fourth generation decides to start on his or her own.
The management of the foundation will be done by a professional company,
typically a trusteeship firm. There is an increasing trend of forming
trusteeship companies, said Rishabh Shroff, principal associate at
Amarchand Mangaldas who is involved in drafting family agreements. In
such agreements, there can be provisions that can take care of the
investments of the foundation and also to ensure that interests of members
of the family are protected.
The main objective is to allow the new generation members to have the
freedom to pursue their interests and also aid troubled companies. Talking
about the bailout plan, professor Kavil Ramachandran, Thomas Schmidheiny
chair professor of family business and wealth management at the Indian
School of Business, said it could be novel in the Indian context. I expect it to
work like a private equity fund with very clear governance principles and
strong professional approach which will be required to avoid pressures from
family units. This will be another way to address the functions of a family
office.
Who's Who
She may not be the quintessential female billionaire considering she is not
exactly self-made nor does she have any qualms in admitting to this fact or
talking endlessly and joyously about her 9 children! (Yes, she has officially
set the record for billionaire mother with the most children.)

Yet, Savitri Jindal is the richest woman in Asia and more importantly, the nonexecutive chairperson of the India's highest valued private steel producer,
Jindal Steel and Power Limited (and JSW steel) as well as a member of the
Haryana Vidhan Sabha. She even served as a Minister of Power in the
Government of Haryana until 2010.
She may have inherited her prestigious business position due to a tragic
helicopter crash which claimed her husband, OP Jindals life in 2005 but she
has held on to the reigns tightly and even managed to quadruple the
companys turnover in the last 4-5 years!
Money Matters
If Forbes is to be believed, Savitri Jindal is worth over 14.4 billion dollars and
possibly even more. This makes her the worlds 56th richest person, Asia's
richest woman, as well as the worlds 4th richest mother.
Early Days and Career
Unsurprisingly, coming from a bygone Indian Era and having had truly
traditionalist as well as conservative values inculcated in her since a young
age, Jindals first priority was never business or money. In fact, until she was
forced by an act of fate to take charge of these matters, she was perfectly
content being the woman of the house, raising her 9 children, and taking
care of her large family.
She followed the mantra that the man would take care of everything on the
outside while the woman would take home matters into her own hands,
which she did until the helicopter crash catapulted her to her billionaire
status.
Even now, she tends to shy away from the business aspects of her
responsibilities and focuses more on her public life, which is clearly closer to
her heart, and tends to spend 3 days a week at the Haryana Legislative
Assembly.
Personal Probe
Jindal was born on 20th March, 1950 and resided in Hisar, Haryana for most
of her life. She was raised in a conservative family, married OP Jindal in 1970,
and proceeded to bear him 9 children. Since her husband's death, she has

ensured that (as per his wishes) each one of her 4 sons has their own
independent domain to manage so that there's little opportunity for conflict.
Management Methods
Jindal is known all-around for her down-to-earth persona and ability to remain
unaffected by all the sprawling signs of wealth, keeping her priorities very
clear. Thus far, she has shown tremendous power in being a quiet yet
affirmative leader who makes sure to supervise any matter of importance
even if it is merely a chat between her sons if it regards family matters.
Her manner is not at all aggressive and she says her husband always
believed that the workers in his factory must and should be treated as
extended family and were to be taken care of. He felt the same about his
career in the constituency and now Savitri says she is only trying to live up to
his memory and protect his legacy.
The Group
Founded in 1952 by OP Jindal, the Jindal Group is one of India's major
conglomerates, with an estimated value of over 12 billion dollars. It has
interests in Steel, Power, Mining, Oil & Gas and Infrastructure. In terms of
tonnage, it is India's third-largest steel producer.
The Jindals of the O.P. Jindal Group aren't much different from most Indian
business families. The patriarch, a farmer's son, began as a small-time
bucket manufacturer in the Hisar district of Haryana. Today, the group is a
$12-billion (Rs 55,200 crore) conglomerate, with steel as the flagship
business.
After Jindal Senior died in a helicopter crash in March 2005, the four brothers,
Prithvi, Sajjan, Ratan and Naveen, came to the fore, each with a strategy to
grow his share of the ample pie. The 60-year-old matriarch, Savitri Jindal,
who is the Non-Executive Chairman of the group, binds the family together. A
sitting Congress MLA from Hisar who was the Minister of State for Revenue in
the Haryana government until recently, Savitri is widely acknowledged as the
wealthiest woman in India.

Like most business families, the four sons and their five sisters meet
whenever they get an opportunity. The brothers meet at least three times a
year at the family house in Hisar and at least twice in a month in Delhi,
where three of them live- Sajjan lives in Mumbai. The most recent occasion
when all the family members - brothers and sisters along with their spouses
and children - got together was at the wedding of Sajjan's daughter Tanvi in
Florence, Italy, in early June.
So, what's so special about the O.P. Jindal Group? They're clearly not headed
for a split, what with each brother having the largest holding in the part of
the pie he manages, with the other three having smaller but proportionate
stakes in the empires of the other brothers. As Sajjan Jindal, Vice Chairman,
JSW Group, points out: "We are one family, we share a good equation and
support each other. Each one is an owner in each other's industry."
Example: If Sajjan has an 18 per cent stake (including nine per cent held by
his mother, which Sajjan will eventually inherit) in JSW Steel, his brothers
have nine per cent each in the company. Unlike, say, RPG Enterprises, where
the group is a single entity with the Goenka brothers, Harsh and Sanjiv,
spearheading its management, each of the Jindal brothers has carved out his
own space, largely in steel-related businesses. Eldest brother Prithvi, for
instance, has SAW pipes, which are used to transport oil and gas, as his
flagship business. Ratan has stainless steel as his chosen area of expertise.
Now, take a glance at the activities of Sajjan and Naveen: Both have huge
capacities in steel, Sajjan with 7.8 million tonnes per annum, or mtpa, and
the youngest Jindal with 3 mtpa. Whilst so far Sajjan has been focused on flat
steel (used to make automobiles, consumer durables, trains and ships),
Naveen has been making largely long products (used to make railroads,
bridges and wires).
Now for the twist: Naveen plans to make flat products even as Sajjan starts
making longs. Both brothers have earmarked ambitious expansion plans.
Sajjan wants to hit 32 mtpa of steel by 2020, with roughly 40 per cent of that
being long steel. Ultimately, Naveen wants to get to 34 mtpa with an
intention of having more than one-third of the capacity as flat products.

Alongside, both brothers are on the lookout for iron ore and coal mines, to
gain control over raw material.
The overlap doesn't end there. The two also have a presence in power
generation - Sajjan's JSW Energy has a generation capacity of 995 MW, which
he plans to increase to 11,390 MW by 2016; and Naveen's flagship Jindal
Steel & Power Ltd (JSPL) will be increasing its capacity from 1,354 MW to
11,500 MW by 2020. Both brothers want to be integrated players in power,
right from generation to transmission & distribution to trading.
So, what gives? Well, one way to look at it is that both brothers have
aggressive plans for steel and power simply because India needs a lot of
both. Another way to look at it is that both brothers would have strategically
planned their expansions on the basis of geography, with the plan that each
brother address the markets' needs, region-wise. But then, as far as locations
for new projects are concerned, both brothers - as indeed virtually all other
steel majors - are eyeing the mineral-rich states of Karnataka, Orissa,
Chhattisgarh and Jharkhand. Naveen recently met Orissa Chief Minister
Naveen Patnaik to discuss setting up steel and power projects in the state
involving an investment of over Rs 1 trillion.
"I expect more than 90 per cent of our investments (over the next 10 years)
to flow into the expansion of steel and power capacities," says Sushil Maroo,
Director of JSPL. Sajjan has 90 per cent of his investments in Karnataka including a 6.8 million tonne integrated steel plant at Vijayanagar in Bellary
district, spread over a 9,000-acre campus. But he will have to look beyond
Karnakata to ensure he gets more iron ore. M.V.S. Seshagiri Rao, Joint
Managing Director & Group CFO of JSW Steel, says the company today has
20 per cent of the iron ore requirement for its existing 7.8 mtpa capacity.
"The idea is to go as high as 100 per cent," says Rao. For the Jindals, it
appears that family harmony is one thing, and the market place dynamics
quite another. Sajjan isn't fazed by the prospect of competing with his
younger brother. "There is no written rule that we cannot compete. If some of
our products are competing in the marketplace, it does not matter. We
compete openly. There is no restriction on each other," says Sajjan.

Yet, competition may be a rather obvious fallout of two brothers spotting

opportunities in two high-growth sectors. As N.K. Jain, Vice Chairman, JSW
Energy, says, rather matter-of-factly: "We compete because we are in the
same businesses."
Now let's look at the two brothers' plans from another angle: Combine the
planned capacities of the two in power generation and you're looking at a
total upwards of 20,000 MW in five years. That would propel the O.P. Jindal
Group amongst the top two private sector generators in the country, with
only Anil Ambani's Reliance Power ahead of it (assuming all the proposed
projects materialise). Similarly, in flat and long steel, the two brothers would
have a combined capacity of over 60 mtpa in 10 years - substantial enough
to take on the likes of Tata Steel, Steel Authority of India, ArcelorMittal (which
is finalising its India game plan) and POSCO (assuming it finally manages to
make progress in the country).
The huge capacities that are required to be put up in these two sectors about 130 GW for power and about 55 million tonnes for steel by 2020 could also enable the brothers to divvy up the domestic market, region-wise.
Jindal Power Ltd (JPL), for instance, will be expanding its thermal power
capacities in states such as Jharkhand, Orissa and Chhattisgarh with a hydroelectric unit slated to come up in Arunachal Pradesh.
Sajjan's plants, via JSW Energy, will be located in Maharashtra, Rajasthan and
Himachal Pradesh, besides the one already operational in Karnataka. But
clearly, it is steel that runs in the veins of the Jindals, and nobody epitomises
that passion more than Sajjan, who commissioned his integrated steel plant
in Vijayanagar way back in 1998. At least once a month he visits the
complex, using the opportunity to fly his favourite four-seater CIRRUS SR22
aircraft. Last fortnight, the JSW Group chief took another step to strengthen
his steel business when he inked a deal with JFE Steel of Japan, the world's
fifth-largest steel producer.
JFE will pick up a 14.99 per cent stake in JSW Steel for about Rs 5,700 crore.
The money will help Sajjan bring down his debt from a level of Rs 16,000
crore. More importantly, he can now access the Japanese company's
technology to make outer panels for cars - which carmakers are importing -

thereby opening up a totally new market for JSW. Analysts suggest that
whether the two brothers end up competing or combining forces could well
be determined by market conditions. For instance, a glut of steel globally
will, perhaps, compel the brothers to fight it out for market share.
However, as Ashok Jainani, Head of Research at Khandwala Securities, says:
"The two groups could align if the United States's spending fuels growth and,
thereby, demand for steel." The world could then be a huge market for the
Jindals - huge enough for each brother to reign in regions that are poles
apart.