JSW Cement pushes IPO plans to 2022 due to muted demand
2 min read . Updated: 11 Aug 2020, 06:39 AM ISTIt will use the intervening period to ramp up its annual capacity from 14 million tonnes (mt) to 20 mt
MUMBAI : JSW group’s initial public offer for its cement business has been postponed by two years from the earlier date of December 2020, Parth Jindal, MD, JSW Cement, told Mint. The company will use the intervening period to ramp up capacity from the current 14 million tonnes (mt) per annum to 20 mt a year by 2022.
“Last year was very weak for the cement sector; it was the first year since 1991 when there was a decline in cement consumption in the country," Jindal said. “There’s a decline again this year because of which our plans to expand had to be been postponed. Year to date this year, our cement production is lower by 30% from the year before.
The aggregate sale volumes of listed cement companies declined 13% year-on-year in in the March quarter, on account of the lockdown beginning. After falling 85% year-onyearin April, domestic cement demand recovered quickly in May 2020, with the decline reducing to 22% yoy for the month. The recovery was driven by rural demand which was aided by a good rabi crop, adequate availability of local labour and lower spread of covid-19, a July 30 report by credit ratings agency India Ratings said. The agency expects the rural segment will continue to outperform urban demand over the next few months.
JSW Cement’s turnover touched ₹3000 crore last year and is projected to rise to ₹3500-3700 crore this year. The company’s main markets are in southern India, the Mumbai Metropolitan Region and parts of eastern India. “We will restart capital expenditure projects worth ₹1200 crore in October; we’re adding 3 mt of capacity. This split between 1.5 mt of clinkerisation capacity and 3 mt of grinding capacity," Jindal said.
Meanwhile, JSW Paints, the group’s other privately-held business, is expected to triple revenues from ₹200 crore last year to ₹600 crore this year, Jindal, who is also MD, JSW Paints, said. “We’re the number one player in coil coating; this goes into consumer appliances like washing machines, refrigerators, and for roofing segment. We have overtaken Berger Becker, Nippon and Nerolac." While JSW Paint’s – our anchor client is JSW Steel ‘s colour coated steel division, Jindal said the company also sells to AM/NS India, Asian Colour Coated Ispat, Bhushan Power and Steel, Uttam Galva Steel while also exporting to Europe and Africa.
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