JSW Cement, part of the diversified JSW Group will be investing Rs 1,600-1,800 crore in the next two years to take the cement production capacity to 20 million tonnes per annum (MTPA) from the current 12.5 MTPA. At present, the company has cement manufacturing facilities at Nandyal in Andhra Pradesh, Vijayanagar in Karnataka, Salboni in West Bengal and Dolvi in Maharashtra. The capacity expansion will be through setting up of new manufacturing facilities at Jajpur in Odisha of 1.2 MTPA and ramping up capacity in Dolvi to 4.5 MTPA and the facilities of the recently acquired Shiva Cements to 1.2 MTPA.
Talking to newspersons on the sidelines of its retail foray into western India with Concreel HD cement, Parth Jindal, JSW Cement managing director, said the expansions will be through a mix of equity and debt in the ratio of 30:70. JSW Cement has commenced manufacturing of Concreel HD cement in Maharashtra, which will be serving western India markets of greater Mumbai, Navi Mumbai, Thane and Raigad districts. The company plans to expand its retail footprint throughout Maharashtra by March 2018.
The company is also planning to come out with an initial public offering (IPO) once it reaches its desired capacity of 20 MTPA by 2019. “We are targeting 20 MTPA capacity by 2019 through various organic expansion plans that we have embarked upon, also we expect our capacity utilisation to reach 75% from the current 67%-68% mark, which is when we feel we should come to the market for the fuel for further expansion,” he said.
As for inorganic growth, Jindal said with the projections of high demand for cement in the country, “the valuations are steep and seller expectations are high”, and is not a right time to expand inorganically. “We acquired Shiva because of the strategic fit it has and for the limestone reserves. However, post the IPO when we have the funds at our disposal build versus buy will become an important question for us to answer,” he said.