IPO-bound JSW Cement opts out of cement war
'We don't have the aukat [stature] right now to fight the big boys and I don't want to go to my father for help in this business,' said Mr. Parth Jindal, the son of leading industrialist and the Chairman of the JSW Group Sajjan Jindal.
Explaining further, he said that the firm was not interested in competing with either Ultratech or Adani, currently the top two players in terms of market share in the cement industry.
India's cement players have been competing to expand through acquisition in the industry in the past two years. Adani Group has been eyeing the top spot which is now occupied by Birla-owned Ultratech Cement. The latter holds 22% of the 637 million tonnes per annum (MTPA) of capacity, according to the prospectus of JSW in Fiscal 2024. Adani, with its Ambuja and ACC acquisitions, controls 16% of the capacity. It has also acquired smaller players like Penna Cement and Orient Cement. Ultratech, too, acquired India Cements and a minority stake in Star Cement.
In this context, Mr. Jindal said that the company would not consider acquisitions until they touch a capacity of 42 million tonnes. Currently, the company has a capacity of 20.6 million tonnes, which is 3% of the total capacity in fiscal 2024. 'We are working on getting to 10% (market share). Visibility is about 6% to 8%,' he said in a media briefing after the announcement to list.
The company is also not looking to enter the South Indian market as Mr. Jindal said he believed that it is 'overcrowded and lacks pricing power.' JSW plans to stick to expansion in North and Central India.
The company's shares are priced at ₹139 to ₹147 per equity share in lots of 102 shares and multiples thereafter. The IPO is for ₹1,600 crore of fresh issue and the rest on offer for sale. The company plans to use the proceeds to finance its cement unit in Rajasthan, debt payment and general costs. The bidding closes on August 11.
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