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JSW Cement charts path to 2021 IPO

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JSW Cement charts path to 2021 IPO

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JSW cement is planning to organically ramp up its capacity to 20 million tonnes before raising Rs 3,500 crore via public issue to build a war chest for acquisitions.

While JSW Group behemoth JSW Steel has aggressively pursued acquisitions for capacity expansion, JSW Cement is taking the organic route. In the last three years, the company has doubled its capacity from 6 million tonnes per annum (mtpa) to 12.6 mtpa and is now looking to spend Rs 2,000 crore to reach its target of 20 mtpa by the end of 2020. After raising a further Rs 3,500 crore through an initial public offering (IPO) in FY21, it will look at entering the north and central markets.

JSW Cement currently has a debt of Rs 2,400 crore at a leverage ratio of 5x, and is looking to fund this year’s expansion through internal accruals. Parth Jindal, the managing director of the company highlighted that its volume growth of 50 percent and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 25-30 percent are industry-beating numbers.
Industry leader Ultratech Cement has a capacity of over 100 mtpa, and has been ramping up capacity utilisation at the assets it acquired from Jaypee and Binani.
Currently, JSW Energy is operating in Western India through its Dolvi plant in Maharashtra, Eastern India through its Salboni and Jajpur plants in West Bengal and Odisha respectively, and South India through its Vijayanagar plant in Karnataka and assets acquired from Shiva Cement in Tamil Nadu. It is also looking to ramp up Dolvi's capacity to 4 mtpa from the current 2.2, Vijayanagar to 5 mtpa from the current 3.2, Salboni to 3.6 mtpa from the current 2.4 and Jajpur to 2.4 mtpa from the current 1.2.
The company is also in the process of commissioning a clinker unit in UAE’s Fujairah, to import raw materials for its unit in Maharashtra. With another clinker unit in Tamil Nadu’s Salem in the works, it is looking at being independent of imported raw materials before its IPO.
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