BackJSW Cement to invest ₹3,000 crore for a new cement facility in Rajasthan
The cement manufacturing facility will include a clinkerization unit of up to 3.30 mtpa and a grinding unit of up to 2.50 mtpaJSW Cement aims to increase its cement manufacturing capacity to 60 mtpa over the next five years from 21 mtpa now
PremiumNEW DELHI:JSW Cement, the IPO-bound cement venture of the $24.25-billion JSW Group, plans to invest around ₹3,000 crore to establish an integrated cement manufacturing facility in Rajasthan, marking its entry into the northern markets.
The proposed investment will be funded through a mix of equity and long-term debt, the company announced on Tuesday, adding that it would create more than 1,000 direct and indirect jobs.
The new cement facility in Rajasthan’s Nagaur district will include a clinkerization unit of up to 3.30 million tonnes per annum, a grinding unit of up to 2.50 mtpa, and an 18-megawatt power plant.
JSW Cement’s current cement manufacturing capacity stands at 21 mtpa.
“The proposed investment to establish our integrated cement facility in Nagaur puts JSW Cement firmly on its path to achieving a pan-India footprint within the next few years," Parth Jindal, managing director, JSW Cement, said in a statement.
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The new facility, JSW said, will include an overland belt conveyor stretching about 7 km to transport limestone from the mines to the manufacturing plant, and arrangements to use alternative fuel in the kiln.
JSW Cement has already received certain regulatory and statutory approvals for the new facility, the company said.
The new unit marks JSW Cement’s entry into the north Indian cement market, enabling it to service Rajasthan, Haryana, Punjab, and the National Capital Region.
“This investment will mark our entry into the fast-growing cement markets of North India. These states have one of the highest GDP growth rates and are witnessing significant infrastructure and housing development," said Nilesh Narwekar, CEO of JSW Cement.
JSW Cement currently has manufacturing units at Vijayanagar in Karnataka, Nandyal in Andhra Pradesh, Salboni in West Bengal, Jajpur in Odisha, and Dolvi in Maharashtra.
IPO to fund mega expansion
JSW Cement, Jindal had told Mint last year, plans to go public through an initial public offer post the ongoing general election to raise as much as ₹4,000 crore.
The company plans to utilise the proceeds from the IPO to increase its capacity to 60 mtpa over the next five years from 21 mtpa currently, which will require an investment of ₹18,000 crore.
JSW Cement expects over 20% of the total capital expenditure to come through the IPO, and plans to raise the remaining amount through internal accruals and debt.
The JSW Group earlier this year announced plans to invest ₹65,000 crore to set up an integrated steel manufacturing complex in Odisha, which will also include a cement manufacturing unit.
An industry on steroids
India’s cement industry is on course to increase capacity by 150-160 mtpa from FY25 to FY28, according to a report by Crisil Ratings. Over the past five fiscal years, the industry’s capacity has increased by 119 mtpa to 595 mtpa.
“As much as 70-75 million tonnes of the capacity addition is expected to be commissioned next fiscal year, with 50-55% concentrated in the eastern and central regions," Crisil had said.
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However, the intense pace at which capacity is being added will likely prevent the cement industry’s margins from improving to the extent that they did in 2020-21, when lower energy prices boosted profits even though the pandemic weighed on demand.
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