JSW cement arm puts IPO on hold, India
Sajjan Jindal-promoted JSW Cement has decided to put its initial public offering on hold as it moderates expansion keeping in mind the oversupply situation prevailing in the domestic market.
“Our IPO for JSW Cement is off for the moment. Instead we are focused on starting the five million tonnes per annum capacity plant at Andhra Pradesh in the next one month, which will use waste slag from our steel plant and fly ash, generated as a waste product by JSW Energy’s thermal power plants. The plant has been set up at a cost of INR1300 crore which is almost 30 per cent cheaper per tonne than other comparable cost of other green field cement plants,” a top JSW group official told Financial Chronicle. The funds for the cement project are being raised by private companies of group vice-chairman Sajjan Jindal and debt from banking channels.
The company, at present, has been marketing JSW branded cement in key southern markets by using slag from its steel plants and blending it with clinker purchased from outside to produce cement.
“We have been selling around a million tonnes per annum of JSW cement in markets such as Andhra Pradesh and see no problem competing with other firms because our capital costs and operating costs per tonne are both lower than other greenfield plants,” said the top JSW official.
Due to using waste products as raw materials for making cement, the company expects its operating cost per tonne of cement to be as much as INR400/t lower. This is expected to allow the firm to compete and stay in business even if cement prices come under pressure. More importantly, finding a gainful use for millions of tonnes of slag and fly ash, which could otherwise become an environmental waste management issue for JSW Steel and JSW Energy, is the reason for the cement business becoming a focus area for the group.
“We expect the cement business to clock a profit in financial year 2013 itself. Once the five mtpa cement plant becomes operational, apart from the general distributor network in southern markets we will also use our pan India network of 290 JSW Shoppes, to sell cement as in many cases the customers of steel and cement would be the same,” said the official. Published under Cement News
