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JSW Cement, part of the diversified JSW Group led by Sajjan Jindal, has received approval from SEBI to raise INR 4,000 crore through an initial public offering (IPO). The offering includes a fresh issue of equity shares worth INR 2,000 crore and an Offer-for-Sale (OFS) of INR 2,000 crore. Several investors, including AP Asia Opportunistic Holdings and State Bank of India, will divest shares as part of the OFS. The company plans to use the IPO proceeds to finance its new cement unit in Rajasthan and pay down existing debt. It aims to increase its capacity significantly in the coming years.
JSW Cement, a key player in the cement industry and a part of the diversified JSW Group headed by Sajjan Jindal, has received the green light from the Securities and Exchange Board of India (SEBI) to raise INR 4,000 crore through an initial public offering (IPO). The approval, confirmed earlier this week, marks a significant step forward for the company, which had previously filed its draft prospectus in August last year. Advertisement
The IPO is split into two parts: a fresh issue of equity shares worth INR 2,000 crore and an Offer-for-Sale (OFS) of INR 2,000 crore. Notable investors, including AP Asia Opportunistic Holdings Pte Ltd, Synergy Metals Investments Holding Ltd, and the State Bank of India (SBI), will divest shares as part of the OFS. Each of AP Asia and Synergy Metals will offload shares worth INR 937.5 crore, while SBI will sell shares valued at INR 125 crore.
JSW Cement had first submitted its IPO papers to SEBI in August 2023, but the regulatory body had put the initial share sale on hold in September. The go-ahead, given on January 6, signals that the company can now move forward with the public offering.
According to the company's Draft Red Herring Prospectus (DRHP), the funds raised will be utilized for various purposes. A significant portion, INR 800 crore, will go towards financing the establishment of a new integrated cement unit in Nagaur, Rajasthan. Additionally, INR 720 crore will be used to prepay or repay outstanding borrowings. The remaining funds will be allocated for general corporate purposes.
As of March 31, 2024, JSW Cement's total liabilities stood at INR 8,933.42 crore. In terms of financial performance, the company reported a revenue from operations of INR 6,028.10 crore for FY24, up from INR 5,836.72 crore in FY23 and INR 4,668.57 crore in FY22. Despite this growth, its profit for FY24 was INR 62 crore, a decline compared to INR 104 crore in FY23.
Currently, JSW Cement operates manufacturing units in Vijayanagar (Karnataka), Nandyal (Andhra Pradesh), Salboni (West Bengal), Jajpur (Odisha), and Dolvi (Maharashtra). Through its subsidiary, Shiva Cement, it also runs a clinker unit in Odisha. The company's grinding capacity as of March 31, 2024, is 20.60 million tonnes per annum (MTPA), and it plans to increase this to 60 MTPA in the near future.
A number of well-known financial institutions are involved in managing the IPO, including JM Financial Ltd, Axis Capital Ltd, Citigroup Global Markets India Pvt Ltd, DAM Capital Advisors Ltd, Goldman Sachs (India) Securities Pvt Ltd, Jefferies India Pvt Ltd, Kotak Mahindra Capital Company Ltd, and SBI Capital Markets Ltd.
JSW Cement's upcoming IPO is a significant move to support its expansion goals. With the green light from SEBI, the company plans to use the funds raised to strengthen its position in the industry, including the development of a new cement unit in Rajasthan and reducing existing debt. As it works towards its goal of expanding its manufacturing capacity, the IPO offers a clear path to fuel future growth, despite challenges in profitability. The involvement of top financial institutions ensures a streamlined process for the public offering, with wider industry implications.
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