JSW to boost cement capacity to 30 mt by 2025

Suresh P Iyengar Mumbai | Updated on January 16, 2015 Published on January 16, 2015

Also considers producing aluminium if Govt allocates bauxite mines

JSW Group plans to expand its cement production capacity to 30 million tonnes (mt) from 5 mt a year now by setting up grinding units closer to its steel plants. As part of diversification, the Sajjan Jindal-led Group also considers producing aluminium if the Government allocates bauxite mines.

In an exclusive interaction with BusinessLine reporters, Seshagiri Rao, Joint Managing Director, JSW Steel, said the company’s presence in the cement business is small compared with other companies with 60-70 mt capacity.

The Group’s plan is to become a significant player in the sector with 30 mt capacity by 2025, he said.

For instance, a grinding unit put closer to the Dolvi steel plant in Maharashtra can source clinker from Gujarat, mix it with slag available from the plant and tap the vibrant western market.

“Alternatively we can also set up grinding units closer to the cement market and take our slag there. We would source clinker from the closest available location so that we remain competitive,” Rao said.

Aluminium foray

On the company’s venture into aluminium production, he said the Group would like to tap into it if the Government provides the raw material backing.

Cement demand in the South has picked up in the last two months and it is expected to improve further with the Government decision to abandon bitumen in favour of cement, Rao added.

Asked whether cement companies are losing with the Tamil Nadu Government distributing the building material at ₹120 per 50-kg bag, he said there can be a slight difference when compared to the market price, but for JSW, it improves the overall capacity utilisation and reduces fixed cost, besides throwing up a lot of other advantages.

Moreover, cement sold at the Government-notified price of ₹120 or ₹195 a bag is exempt from tax and delivered at factory gate, thus saving on freight cost for cement companies.

Factory gate price

The Government recently notified a scheme whereby cement companies were asked to quote their factory gate price.

Contractors were given this price list to source cement for their projects. JSW Cement has also placed its bids under the scheme.

“I believe other State Governments will also emulate the Tamil Nadu Government model to make cement available for their projects at a competitive price without any subsidy,” he said.

Asked whether the recent rate cut would lead to revival of investment cycle, Rao said it is a misconception that just because there is a rate cut investors will loosen their purse string.

However, the rate cut will lead to more demand and in turn boost fresh investments. “That is exactly why even a 0.25 per cent reduction in interest rate is huge positive for the industry.”

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Published on January 16, 2015
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