Mumbai: JSW Cement has announced the commissioning of its new cement grinding unit in Sambalpur, Odisha, boosting the mid-size cement players’ installed capacity by 1.0 MTPA. The unit will operate under its subsidiary Shiva Cement, with a commercial agreement with Bhushan steel, carrying forward the company’s strategy of setting up cement plants to complement its steel business.
The manufacturing facility in Sambalpur is situated near the borders of Chhattisgarh and Jharkhand, with proximity to the raw materials it requires for production.
“The eastern region of the country is poised for exponential growth in the coming years. With rapid expansion in the manufacturing and infrastructure sectors in the state, Odisha is playing a key role in the industrial and economic growth in the region. This new state-of-the-art facility in Sambalpur, therefore, is a strategic initiative by JSW Cement and marks a significant milestone in our journey to expand and consolidate our position in this market. The world class unit will further consolidate and expand the eco-friendly footprint of JSW Cement,” Mr. Nilesh Narwekar, CEO, JSW Cement, said in a press release to the bourses.
Though JSW is currently a fairly small player in the cement market, it is aiming to grow its base organically. Though demand remains consistent, the company aims to stand out by offering sustainable GGBS (Ground Granulated Blast Furnace Slag) cement that replaces limestone with steel slag. JSW is India’s largest manufacturer of this ‘green’ cement, with an 84% market share. The arrangement with Bhushan steel is crucial here, as the company gets its raw materials easily, potentially lowering its input costs, while offering green cement for India’s growing infrastructure needs.
The company, with a stronger presence in South India, will have to find a way to use this niche product to boost its profits, even as its revenues have remained more or less stagnant at the Rs.6,000 crore mark. The company’s limited presence forces it to adjust its prices in response to market conditions, where seasonal demand and a supply glut can impact revenues.
Its August IPO was oversubscribed more than 7 times, even as the prices have fallen 4% since. Parth Jindal, MD at JSW Cement, had said the company was focused on growing organically, and it wasn’t concerned with competing with market leaders like Ultratech or Adani Cement. For now, this development seems to be a silver lining for its investors, who are hoping for a rise in revenues on the back of its niche, sustainable cement offering.
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