Parth Jindal, MD of JSW, claims the company aspires to be one of India's top 5 cement producers

8 Sep 2023 , 03:52 PM

In the upcoming few years, the Indian cement industry is expected to experience exponential growth. JSW Group is increasing its cement production capacity through a combination of organic growth and acquisitions in order to take advantage of this growth potential. Parth Jindal, managing director of JSW Cement and JSW Paints, discussed the company’s expansion goals as it gets ready to go public next year in an interview with Deborshi Chaki of ET. Edited passages:

How is JSW Cement now utilizing the market opportunity?

Right now, we can produce 19 million tonnes annually. We will reach our capacity of 21 million tonnes by the end of this year. We’ve created a path to get to 60 million tonnes over the following five years for the next stage of expansion. We currently want to carry it out entirely organically and will invest over Rs. 18,000 crore over the following five years. We have also purchased limestone mines through the auction procedure in numerous states over the past few years. There is also room for brownfield expansion at all of our current facilities. One of the top five cement producers in the nation is our goal. Currently, Ultratech is the first cement company, followed by Adani Cement, Shree Cement, and Dalmia. To control around 10% of the market, we wish to expand our footprint. We want to have an IPO in the next calendar year.

What percentage of equity does the promoter group intend to dilution?

We aim to dilution anywhere between 10-15% in the first round and are looking to raise between 3,500 crore and 4,000 crore. We will have to increase equity dilution to 25% over the next three years. In the beginning, the size of the IPO will range from 3,500 to 4,000 crore with a dilution of 10% to 15%, depending on the valuation the market provides. We will have the financial resources after the IPO to expand organically to a 60 million-ton capacity

Would you be considering acquisition opportunities, and if so, how?

Today, there are a lot of resources, in my opinion. I believe there is room for consolidation at between 50 and 75 million tonnes of capacity. Mostly located in the South, West, and East is JSW Cement. Therefore, the majority of our future capacity growth will be in central and northern India. To attain 60 million tonnes, we will build around 25 million tonnes of new greenfield capacity. We spent roughly $60 per tonne in total to install the clinker machine, the grinding unit, and everything else. So now, when we consider an acquisition possibility, we must compare it to this expense. The acquisition strategy gives you the chance to consolidate and purchase cash flows right away. There are no premiums on the assets at certain of our limestone mines because they are up for pre-auction. 

How do you intend to take advantage of JSW Group synergies?

Our customer base is slightly biased toward institutional clients, and here is where the JSW Group’s synergy really shines. This is due to the fact that we sell steel, cement, and paint as a single product to our institutional customers, and we have made significant progress with this market. Additionally, we have JSW One Platforms, a tech platform where our products are offered. We are also actively growing our own RMC and construction chemical businesses at the same time.

What is the business plan for the paints industry?

JSW Paints is operating well and on schedule to meet our desired business plan objectives. We are in our fourth year of business and generated close to Rs. 1,500 crore in revenue last year. We expect to surpass 2,500 crore this year.

Therefore, in terms of sales, we are already the fifth-largest company in the paint industry. By 2026, we hope to have a turnover of 10,000 crore and rank among the top three paint manufacturers in India. About 80% of our desired revenue will come from our decorative paints company, and the remaining 20–25% would come from our industrial coatings business.

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