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JSW Cement puts off IPO plan as slowdown impacts target

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Aiming for 20 mtpa by 2021, public offer only after that: MD

JSW Cement has postponed its initial public offering (IPO) by a year to 2021, as the economic slowdown had taken a toll on firm’s free cash flows and its target of achieving 20 million tonnes per annum (mtpa) by 2020.

The company now plans to become a 20 mtpa player by 2021 and would call for an IPO only after that.

Parth Jindal, MD, JSW Cement told The Hindu, “We will do our IPO only after reaching the capacity of 20 mtpa. Now, we are targeting a capacity of 20 mtpa by 2021 and 25 mtpa by 2023. The slowing economy had impacted the cement demand and prices. The prices are at rock bottom now.”

The company has lined up capital expenditure of ₹2,900 crore to add 11 mtpa of new capacity to its existing capacity of 14 mtpa, to take the total capacity to 25 mtpa by 2023.

This will make JSW Cement, the fifth largest player in market from ninth now.

Out of ₹2,900 crore, debt will help fund ₹1,500 crore and the rest will come from internal accruals.

“We have debt of ₹2,600 crore and at peak, it will go up to ₹3,500 crore in 2022,” said Mr. Jindal.

The firm will look to raise ₹2,500 crore from the IPO to fuel the next phase of expansion to 35 mtpa of capacity.

“We have acquired limestone mines in Gujarat, Rajasthan and central India. The IPO proceeds will be used to expand our cement capacities in these locations.”

When asked about acquisitions, Mr. Jindal said, “We are in talks with some of the players who want to exit due to various reasons. These discussions are outside the IBC process.”

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Printable version | Dec 6, 2019 8:52:43 AM | https://www.thehindu.com/business/jsw-cement-puts-off-ipo-plan-as-slowdown-impacts-target/article30099655.ece

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