JSW Cement promises a capacity expansion spree but says no to buyouts. 'We don't have the aukat,' says Parth Jindal

Mint

13 hours ago

Mumbai: IPO-bound JSW Cements plans to utilize the fresh capital raised and leverage group synergies to double its cement production capacity to 42 million tonnes a year in the coming four years, the company's managing director said.
The company, which has a 3% share of India's highly competitive cement industry, wants to corner a tenth of the market for itself by backing its ability to procure slag, a byproduct of steelmaking, from JSW Steel.
However, rapid expansion while maintaining profitability won't be easy for managing director Parth Jindal and his team. The company will be fighting two industry titans—UltraTech and Ambuja—the cement arms of the Aditya Birla Group and the Adani Group. A war for market share between the two companies washed away the cement industry's margins over the last two years as prices crashed.
The expansion plans become even more ambitious when considering that JSW Cement would not be keen on inorganic growth. The company's balance sheet does not have the necessary capital or cash flow to be able to outcompete its larger peers in a bidding war for existing assets in the mergers and acquisitions market, Jindal said.
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'I don't want to get into a bidding war with a player who's much bigger than me and is much stronger than me today," said Jindal.
'We don't have the aukaat right now to fight the big boys, and I don't want to go to my father for help in this business," he said to a room full of reporters in Mumbai on Monday, using the Hindi term that loosely translates to financial capability.
JSW Cement said that its carbon dioxide emissions were half of the industry average. This was due to it utilizing slag—a waste product in steelmaking—as a key input material. Due to this, about 64% of the company's raw materials were recycled compared to 25% on average for its peers.
Tough competition
JSW Cement competes with players like Aditya Birla-backed UltraTech, which has a consolidated capacity of 192.26 mtpa, Adani Cements, which has surpassed 100 mtpa and Dalmia Bharat, which has a capacity of 49.5 mtpa.
The price band for the IPO has been set at ₹139 to ₹147.
At the upper end of the price band, JSW Cements will have a market cap of ₹200.40 billion. In comparison, key competitors UltraTech lead with a market cap of ₹3.61 trillion, followed by Ambuja Cements at ₹1.49 trillion, Dalmia Bharat at ₹417.67 billion, and ACC at ₹336.16 billion.
From the IPO proceeds, about ₹800 crore will be used to partly fund a new integrated cement facility in Nagaur, Rajasthan. Another ₹520 crore will be allocated for the repayment or prepayment of existing borrowings, and the remaining funds will be used for general corporate purposes
After achieving the 42 million tonnes per annum (mtpa) capacity target, the company has set a secondary target of reaching 60 mtpa in its effort to corner 10% of India's cement industry. India consumed around 435 million tonnes of cement in FY25, Jindal said, adding that cement consumption was expected to grow in line with India's GDP at about 6-7% annually to reach approximately 700 million tonnes in 6-7 years.
'To achieve a 10% share, then the company would need to produce 70 million tonnes. However, for now, the company is targeting 60 million tonnes, which would give us a 7-8% share," said Jindal.
The capacity addition would be focused on new geographies. Currently, JSW Cement is present in southern, western and eastern India. It wants to become a pan-India player by entering north and central India.
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The company is making plants closer to their own limestone mines and near ports to make logistics cheaper. 'We leverage the group synergy when it comes to distribution of our products," said Jindal. 'Cement and TMT rods are sold at the same counters. JSW Steel is the largest TMT producer in the country, and hence, this gives us a very good headstart whenever we enter any new geographies."
Jindal claimed that JSW Cement would spend at least 40% less than the company's peers to add every tonne of new cement capacity. This was because of the company's product mix.
Group synergy
The company uses slag secured from JSW Steel to make Ground Granulated Blast Furnace Slag (GGBS), a substitute for cement that is not only cheaper, but also more suitable for infrastructure projects.
'When you look at the capex needed for GGBS, it's equivalent to a grinding unit, but the earning that you make on GGBS is equivalent to the earning you make on cement. So with way less capex, you're able to build GGBS capacity and earn as much Ebitda as cement. So that's one big advantage we have," said Jindal.
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The IPO size for JSW Cement was reduced from ₹4,000 crore to ₹3,600 crore, with the entire reduction in the primary capital. When the draft red herring prospectus (DRHP) was filed, the industry was going into a downturn, but now industry conditions have improved, and the cement maker's own performance has strengthened, reducing immediate capital needs, said Jindal, adding the company wants to minimise equity dilution at this stage. It may consider dilution at a later stage at a better valuation, he said.
JSW Cement will launch its ₹3,600 crore IPO on 7 August and be listed on the stock exchanges on 14 August.