JSW Cement defers listing, expansion plans further amid Covid-19 crisis

JSW Cement has deferred its expansion plans by six to 12 months as well as plans of listing on the bourses.
 

The company had earlier earmarked around Rs 2,900 crore to fund its expansion, namely brownfield and some other organic projects, to raise the installed capacity from around 14 million tonne per annum (mtpa) to 25 mtpa by 2023. Around 50 per cent of the capital outlay is being funded by debt and the rest from internal accruals.
 

“As a result of the current economic situation, our expansion plans are being deferred by six to 12 months. But these will happen for sure,” Nilesh Narwekar, CEO of JSW Cement, said.
 

“As of now, we do not need to raise capital and the current economic situation is also not conducive. We want to have certain scale of operations and a certain level of Ebitda before we go for listing. But when and as it happens, it will be a big listing,” Narwekar said.
 

Even before the pandemic hit the country, JSW had postponed its expansion and listing plans. The original plan was to evolve into a 20 mtpa company by 2020.

The company plans to expand capacity in Shiva Cement, where it has a 54.44 per cent stake, which will help in further expansion of its Salboni plant in West Bengal. Out of the 11 mtpa expansion, 6 mtpa is being added in east India with 2.5 mtpa each in the western and southern parts of the country.
 

Narwekar expected a revival in cement demand from the Q3 period this financial year. “By Q3, it is expected that there will be an uptick in demand, and by Q4 period, the demand condition should normalise,” he said.
 

Industry officials said though there has been some recovery in May, estimated at 40 per cent to the usual demand, cement sales are expected to remain tepid in the next 2-3 months at 30-40 per cent of the usual demand.
 

“We expect east India to bounce back faster than the rest of the country. Labour availability in east will not be a constraint if a portion of the migrant labourers choose to stay back and projects commence,” Narwekar said.
 

Sources said one of the key factors behind the IPO was to raise funds for expansion into north and central India – territories where it was hitherto absent. However, JSW Cement has acquired limestone mining rights in Rajasthan, Chhattisgarh, and Gujarat.