JSW Cement Vows Capacity Expansion, But No Buyouts

Firm plans to double production capacity in four years using IPO proceeds, group synergies

- Dipali Banka & Nehal Chaliawala

PO-bound JSW Cements plans to utilize the fresh capital raised and leverage group synergies to double its cement production capacity to 42 million tonnes a year in the coming four years, the company's managing director said.

The company, which has a 3% share of India's highly competitive cement industry, wants to corner a tenth of the market for itself by backing its ability to procure slag, a byproduct of steelmaking, from JSW Steel.

However, rapid expansion while maintaining profitability won't be easy for managing director Parth Jindal and his team. The company will be fighting two industry titans—UltraTech and Ambuja—the cement arms of the Aditya Birla Group and the Adani Group. A war for market share between the two companies washed away the cement industry's margins over the past two years as prices crashed.

The expansion plans become even more ambitious when considering that JSW Cement would not be keen on inorganic growth.

The company's balance sheet does not have the necessary capital or cash flow to be able to outcompete its larger peers in a bidding war for existing assets in the mergers and acquisitions market, Jindal said: "I don't want to get into a bidding war with a player who's much bigger than me and is much stronger than me today."