JSW Cement to Go Public, Files Draft RHP for 4,000 Cr. Issue
JSW Cement Ltd., a major Indian cement manufacturer, filed a Draft Red Herring Prospectus (DHRP) with Securities and Exchange Board of India (SEBI) on 16th August 2024. As per JSW Cement’s DRHP, the size of this issue will be about Rs. 4,000 crore.
Mr. Parth Jindal, MD of JSW Cement, had mentioned in August 2023, that the company would be going public after the 2024 general elections.
IPO to Offer a Mix of Fresh and Existing Shares
As per the filed DRHP, JSW Cement’s issue will be a mix of fresh and existing shares, having a face value of Rs. 10 apiece. The company seeks to raise Rs. 2,000 crore through the issue of fresh shares and the remaining Rs. 2,000 crore from the sale of existing shares.
However, the DHRP did not specify what portion of the issue would be issued to different categories of investors.
Three Selling Shareholders to Offer their JSW Cement Shares
Existing shares which will be offered for sale in JSW Cement’s issue will be sold by three shareholders, namely AP Asia Opportunistic Holdings Pte. Ltd., Synergy Metals Investments Holding Ltd., and State Bank of India.
Out of these shares, AP Asia Opportunistic Holdings and Synergy Metals Investments Holding will each sell shares aggregating to a value of Rs. 937.50 crore, while SBI will offer shares worth Rs. 125 crore.
Proceeds from Fresh Shares to Partly Fund Nagaur Cement Unit
JSW Cement will utilise proceeds from the freshly issued shares offered in its IPO to partly fund the development of its plant in Nagaur, Rajasthan. JSW Cement will invest a total of Rs. 800 crore from the IPO proceeds for this purpose from FY-25 to FY-27. Out of this Rs. 800 crore, the company will invest Rs. 100 crore in FY-25, Rs. 600 crore in FY-26, and Rs. 100 crore in FY-27.
Brief Funding Details for JSW Cement’s Nagaur Cement Plant
JSW Cement’s Nagaur unit is being developed with a total cost estimation of Rs. 2,697.25 crore. As of 30th June 2024, Rs. 287.86 crore has already been utilised in this unit, and the remaining Rs. 2,409.39 crore will be funded as a combination of debt (Rs. 1,609.39 crore) and equity (that is, from the aforementioned IPO proceeds).
Debt Repayment, General Corporate Expenses to be Covered
JSW Cement will utilise Rs. 720 crore of the net IPO proceeds during FY-25 for “Prepayment or repayment, in full or in part of all or a portion” of “certain outstanding borrowings”. The DRHP added that as on 31st March 2024, JSW Cement’s total debt stood at Rs. 5,835.76 crore.
Exact utilisation of the remainder of IPO proceeds was not mentioned in the DHRP.
However, the DRHP added that the company would use a component of IPO proceeds for ‘General Corporate Purposes’. The size of this component has not been finalised yet, though it will be limited to not over 25% of the net IPO proceeds.
About JSW Cement: Mumbai-based JSW Cement is a part of the JSW Group. The company has its facilities in locations which include Andhra Pradesh, Karnataka, West Bengal, Maharashtra, Odisha, and the UAE amongst others. Currently, JSW has a total cement production capacity of 21 MMTPA. For FY-24, the company recorded a turnover of about Rs. 6,028 crore.
