India’s largest lender, the State Bank of India (SBI), has invested Rs 100 crore in JSW Cement, a part of the $13 billion JSW Group to buy a minority stake in the firm, JSW Cement said in a statement on Tuesday.
As a part of the transaction, SBI will be issued compulsorily convertible preference shares (CCPS), and the conversion of these CCPS into common equity of the company will be linked to the company’s future business performance and valuation determined at the time of the proposed initial public offering (IPO), expected in the next 12-18 months, JSW Cement said. JSW Cement will use the funds for expanding its manufacturing capacity to 25 million tonnes per annum (MTPA) from 14 MTPA currently.
SBI’s investment comes within months of Apollo Global Management and Synergy Metal Investment Holdings Ltd investing about Rs 1,500 crore ($200 million) to acquire a minority stake in the unlisted cement maker. The two private equity (PE)firms invested about Rs 750 crore each, and the deal had got competition commission of India (CCI)’s nod in August.
“We are the largest green cement company in India. In a short span of three years, we have increased our capacity from 6MTPA to 14MTPA and are now working towards achieving the 25MTPA milestone over the next 24 months,” said Parth Jindal, Managing Director, 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. The company’s subsidiary, Shiva Cement, is currently investing over Rs 1,500 crore in a 1.36 MTPA clinker unit project to be established in Sundergarh district of Odisha, JSW Cement said. The project also includes setting up of a 1 MTPA grinding unit and associated facilities. The company said it converts industrial waste into cement and other building materials.
"Financing our growth and expansion strategy with investment from a power banking partner such as SBI sets us up very well for our planned IPO in the next 12-18 months,” said Narinder Singh Kahlon, Director Finance of JSW Cement.
