JSW Cement files draft papers with SEBI to raise ₹4,000 cr via IPO

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JSW Cement, part of Sajjan Jindal promoted diversified JSW Group, on Friday filed a draft red herring prospectus (DRHP) with the capital markets regulator SEBI to raise ₹4,000 crore through an initial public offer (IPO).

The initial share sale comprises a fresh issue of equity shares worth ₹2,000 crore and an offer for sale (OFS) of ₹2,000 crore by investor shareholders, according to DRHP.

As a part of the OFS, AP Asia Opportunistic Holdings Pte Ltd and Synergy Metals Investments Holding Ltd will offload shares worth ₹937.5 crore each, and State Bank of India (SBI) will divest shares valued at ₹125 crore.

IPO to help finance new Nagpur unit

The company will utilise proceeds of ₹800 crore on “part financing the cost of establishing a new integrated cement unit at Nagaur, Rajasthan” and ₹720 crore on “prepayment or repayment” of outstanding borrowings availed by it.

The rest would be used for general corporate purposes.

However, the total amount for general corporate purposes shall not exceed 25 per cent of the gross proceeds, it added.

As of March 31, 2024, JSW Cement’s total liability was at ₹8,933.42 crore.

Its financial liabilities include a borrowing of ₹1,678.90 crore, ₹1,184.40 crore dues of creditors (other than micro and small enterprises) and other financial liabilities of ₹842.02 crore.

Its revenue from operations for FY24 stood at ₹6,028.10 crore. This was ₹5,836.72 crore in FY23 and ₹4,668.57 crore in FY22.

Its profit for the year was ₹62 crore in FY24 and ₹104 crore in FY23.

As of March 31, 2024, it has an installed grinding capacity of 20.60 MTPA (million tonnes per annum) and has an ambition “to reach an aggregate capacity of 60 MTPA”.

The company presently operates manufacturing operations at units based at Vijayanagar in Karnataka, Nandyal in Andhra Pradesh, Salboni in West Bengal, Jajpur in Odisha and Dolvi in Maharashtra.

JSW Cement is the sixth largest player in the segment led by Aditya Birla Group flagship firm UltraTech Cement.

The sector is witnessing consolidation, and the top five players – UltraTech Cement, Shree Cement, Ambuja Cement (including ACC Ltd), Dalmia Bharat and Nuvoco Vistas account for approximately 54 per cent of the total market share in FY24.

UltraTech and Adani Group’s Ambuja Cement are pacing up their capacity through acquisitions and brownfield expansions.

With the acquisition of Kesoram Cement and India Cements, along with ongoing expansion projects, UltraTech expects its total cement capacity to surpass the 200 MTPA target by FY27 from its existing 150 MTPA plus capacity.

Adani group, which jumped into the cement sector in September 2022, after acquiring Ambuja Cement from Swiss firm Holcim for cash proceeds of $6.4 billion (about ₹51,000 crore) has also set up a target to achieve a 140 MTPA capacity by FY28.

Gautam Adani-led group owns ACC Ltd and acquired Sanghi Industries and ACCPL and is currently the second largest cement maker. It announced the acquisition of Hyderabad-based Penna Cement in June at an enterprise value of Rs 10,422 crore, taking its capacity to 93 MTPA.

Besides, JSW Cement through its subsidiary Shiva Cement operates a clinker unit in Odisha.

JM Financial Ltd, Axis Capital Ltd, Citigroup Global Markets India Private Ltd, DAM Capital Advisors Ltd, Goldman Sachs (India) Securities Private Ltd, Jefferies India Private Ltd, Kotak Mahindra Capital Company Ltd and SBI Capital Markets Ltd are responsible for managing the company’s IPO process.