Forbes India 15th Anniversary Special

Parth Jindal and the making of an institution of the future

Third-generation entrepreneur Parth Jindal displays nerves of steel, makes concrete plans to create brands out of commodities, and gives JSW Group a sporting makeover with a fresh lick of paint

Rajiv Singh
Published: Mar 15, 2024 01:35:00 PM IST
Updated: Mar 18, 2024 12:55:05 PM IST

Parth Jindal and the making of an institution of the futureParth Jindal, MD, JSW Cement and JSW Paints and founder of JSW Sports & IIS Image: Nayan Shah for Forbes India
 
Early 2018. Mumbai. Three big guys were seated comfortably at the lunch table. On one of the middling afternoons in February, Sajjan Jindal, Seshagiri Rao and Jayant Acharya huddled for the mid-day meal, which the trio had been having together for years. Usually, the afternoon spread was also the time when the three—group chairman of JSW Group, group CFO and joint managing director and CEO of JSW Steel, respectively—would have something else on their plate: A quick informal, mini update on top business developments.

This Friday, uncharacteristically, the food had taken a back seat, and the mood had turned slightly pensive. “Let us bid higher for Bhushan Steel,” stressed Sajjan, founder of the diversified steel-to-cement-to-energy conglomerate. There was a note of urgency in the voice of the second-generation entrepreneur who started his career with a steel plant in 1982, and over the next few decades, JSW Steel emerged as the biggest steelmaker in the country under his captaincy. Back at the lunch table, he was busy making plans to snap up Bhushan Steel, which was under corporate insolvency resolution process, and on the radar of Tata Steel, which was one of the bidders to acquire the distressed asset. Acharya reckoned the bidding might be a photo finish.

The prospects of a close call made Jindal up the ante. “We just can’t lose that. Raise the bid and let’s be aggressive,” he underlined. Rao, meanwhile, slipped in another query. “Sir, what about Bhushan Power and Steel? What should we do?” the CFO asked, alluding to the impending deadline to submit bids for another bankrupt steel company in Odisha.  

A few seconds later, a bold voice interjected the conversation. “Dad, I hate to tell you this, but I don’t think we are going to get Bhushan Steel,” underlined Parth Jindal, the third- generation entrepreneur who graduated from Brown University in the US, worked at a hedge fund in New York for six months, had another quick stint at JFE Steel, Japan’s second largest steel maker, and finally joined the family business in 2012.

Parth Jindal and the making of an institution of the futureJunior Jindal continued with his pitch. “Bhushan Steel is going to go somewhere else, dad,” he said, and offered another plan of action. “We must buy Bhushan Power and Steel,” he underscored, elaborating on the reasons for making a contrarian bet. “If the Tatas are entering our territory—south and west India—then we have to go into theirs, which is east India,” he argued. “We must buy this.” The patriarch was stunned as well as impressed.

Back in 2013, it was junior Jindal’s turn to be stunned beyond belief. “Go for Tata Tiscon,” was the swift reply from a multi-brand dealer in Kerala when he was asked to recommend the best brand of TMT bars for construction of houses. “I don’t keep Tiscon, but if budget is not a constraint, then you must go for it,” underlined the shopkeeper, who ironically happened to be the biggest retailer of JSW Steel in the state. The man seeking the opinion was horrified. “I was appalled by his brash temerity,” recalls Jindal, who went as a mystery shopper in his attempt to decode a bizarre puzzle.

The problem indeed was perplexing. In 2012, Tata’s TMT bars commanded a massive premium of around ₹8,000 per tonne against JSW. Though the TMT bars of both the companies were of high quality, the staggering price difference between them was hard to fathom. “You studied economics in the US, right?” Jindal’s father was preparing his lad for a litmus test. “Can you find out why there is such a huge discrepancy, and fix it?” he asked.

It was not an easy task for the greenhorn. Everybody he interacted with—from sales and marketing to other verticals—came up with the same answer. “It has nothing to do with the product. It’s about the brand,” was the unanimous opinion. Intrigued by his preliminary findings, Jindal roped in Booz & Company to go deeper into the problem. “Let’s go to the markets of Kerala, Karnataka and Tamil Nadu,” the consultants suggested. “And you have to play the role of a mystery shopper,” they requested the young founder who donned a new role.

Two years earlier, in 2011, Jindal was getting into a new role, and this time he asked for it. It had been four years since JSW Steel bought Baytown steel and a clutch of other business units in the US from Jindal SAW, a conglomerate headed by PR Jindal, Sajjan’s elder brother. One of the costliest acquisitions for JSW Steel in 2007—it was reportedly close to $900 million—the gambit had not paid off even after four years. The business was bleeding heavily, cultural integration was taking a heavy toll, and most of the Indian team members had struggled in vain, and were clueless.

Parth Jindal and the making of an institution of the future

The undergrad pitched himself: “I have lived in America for three years now. I understand the culture. Let me take a stab.” The patriarch was more than happy to give his consent, but added a word of caution: “Don’t compare that factory to any of our factories in India. Go and try to understand, and give me your feedback.”

After a few days of intense probing, Jindal figured out the root of the problem. First, there was a big cultural divide. There were three groups within the factory, and there was a big disconnect. Second, the CEO running the show was not the right choice. “Dad, we need an American CEO,” he said. “It’s an American company, and we must give the right message that it will remain so,” he added, and took a series of steps to fix the issue. The team was changed, responsibilities were reoriented, and the HR culture was made inclusive. “We brought everyone together.”

Slowly the business started improving. Jindal also impressed upon the top management in India to pump more capital into the American business. “You can’t be a 1960s’ car trying to race in a 2012 race,” he says. An innovative production-linked incentive model was ushered in for the workers at the US factories: Daily incentive, weekly incentive and monthly incentive. The results were encouraging. The employees were excited to see the new owners thinking and behaving like an American entity. “We considerably brought down the losses,” he says.

Also read: Praveer Sinha: Charting aggressive renewables strategy for Tata Power

Meanwhile, in 2013, Jindal still couldn’t fathom the brand pull of rival TMT bars. Disappointed and irked, he came back to Mumbai. “The whole episode hit me hard,” he confesses. He came to a conclusion. “If we want to compete in our existing or any new businesses that we enter, we need to build a strong brand,” he says. The young Turk prepared a blueprint on brand building and made a presentation to the board of directors. JSW, he underlined, needs to create a niche for itself, get recognised for nation-building, and do something which will differentiate it from others. “Olympic sports is the answer,” he reckoned, adding that the company must build a high-performance sports centre, which can train athletes and get India medals at Commonwealth, Asian Games, and finally Olympics. Everybody lapped up the idea.

There was a small problem, though. Jindal wanted ₹50 crore to roll out the project for over two years, and the board too was keen to back the bold initiative, but it came up with a conditional acceptance. “If you can manage to get some money from any company in India for this cause, then we will bankroll it,” they declared. Jindal was delighted. He thought it would be a cakewalk. But it was not. He pitched to most of the industrialists. “I got rejected by 99 percent of them,” he says. “Everybody said it’s an outlandish story and doesn’t make sense.”  

There was only one person left on the long list that Jindal had prepared to reach out to. He knocked on the last door and the dice turned in his favour. “When we bought your father’s stock, people thought we were crazy,” underlined Vallabh Bhansali, co-founder and chairman of Enam Group. “Now we are giving you money, people will again think we are crazy,” the seasoned investor beamed, and handed over a cheque of ₹5 crore. “I had tears in my eyes,” recalls Jindal.

Parth Jindal and the making of an institution of the future

Twelve months later, Jindal knew he couldn’t be emotional in his approach. It was 2014, Jindal went to Harvard University to pursue his MBA, and wanted to understand how he could diversify the steel-to-cement-to-energy industrial conglomerate. An Indian professor, Das Narayandas, liked the problem statement and helped Jindal brainstorm along with his three friends. From building material to finance to almost every conceivable segment, the group explored all options. “Finally, we zeroed in on paints,” says Jindal. But why paints? Apart from synergies with other verticals of the JSW Group, the top four paints players had over 80 percent of the market share. “This was a multi billion-dollar opportunity,” he says. After years of preparation, JSW launched paints in May 2019.

Fast forward to 2024. JSW Paints has made a big splash. “We will be the fifth-largest paint company in India this year,” claims Jindal, adding that it will post sales of close to ₹2,500 crore by FY24. “It has been an amazing and audacious journey,” he says, adding that he is lining up IPOs of JSW Paints and JSW Sports. In fact, Jindal has given a sporting makeover to the JSW Group.

 Jindal launched the Sports Excellence Programme in 2012, rolled out the Bengaluru Football Club in 2013, bought a Pro-Kabaddi team—Haryana Steelers—in 2017, acquired a 50 percent stake in IPL team Delhi Capitals in 2018, and bought Pretoria Capitals, one of the T20 teams in SA20 League in South Africa, in 2022 (see box). Jindal has also been spearheading the frenetic diversification of JSW Group into defence, electric vehicles (EV) and batteries. Interestingly, all the efforts are geared towards making JSW a brand to reckon with, and helping the group make a transition from being largely a B2B to predominantly a B2C player. “I want to continue to focus on making JSW an institution,” he underlines. “We have just started.”

Parth Jindal and the making of an institution of the futureJSW’s cement plant in Ballari, Karnataka

The turning point in Jindal’s entrepreneurial journey, though, happened because of cement or what he did with the cement business. “When I took over, it was losing money,” he says, adding that he undertook a battery of steps to make it viable. The team was relocated from Hyderabad to Mumbai, there was a complete change in business, marketing and branding strategy, the organisation was revamped, and a new CFO and CEO were roped in. “Within six months, we turned it into a profit-making company,” he adds. “Cement was the business which gave me the most confidence,” he confesses. What started with cement has snowballed into multiple things, the latest being EVs.

Industry observers reckon that Jindal has cemented his place as one of the top next generation entrepreneurs who is driving a tectonic shift in the way JSW Group is perceived as a brand. “I am really heartened by what Parth is trying to do with the JSW Group,” says Akash Bhanshali, director, Enam Holdings. “He has been taking the right steps. It’s still early days in terms of what he is doing with the cement and paints business, but he is on right path,” adds Bhanshali, who was present in the room when Jindal pitched the Sports Excellence project and got a cheque of ₹5 crore in 2013. “What he has done with sports is not only phenomenal but also a gift to the country,” reckons the investor. Kumar Mangalam Birla, he lets on, was one of the next-gen pioneers in understanding the need to build brands and institutions. “But as far as the Jindals are concerned, Parth has led from the front,” he says.

Marketing and brand experts, too, give full marks to him for playing a bold-new brand game. If you look at the steel market, points out Harish Bijoor, many players entered, became big and collapsed. They largely remained traders and couldn’t build a brand. The Tatas happened to be the exception. “JSW is now playing a bigger game than the others in terms of brand building,” reckons the branding and marketing guru who runs an eponymous brand consulting firm. “Parth is investing in the present and future of consumption and accordingly building a brand pull for the group.”  

Jindal reckons that it’s still early days for him. “I am using my energies to grow the group,” he says, crediting his father for giving him independence and believing in him. Conceding that his father has a bigger risk-taking appetite than him, Jindal underlines that he has been his biggest strength and supporter. “He has always encouraged me to make mistakes, fail, and stand up again,” he says, adding that the vote of confidence from his dad is the biggest reward and award.

(This story appears in the 08 March, 2024 issue of Forbes India. To visit our Archives, click here.)