India Cements to sell Springway Mining to JSW Cement; stock slips 6%

India Cements has sold its Madhya Pradesh limestone mine, and land to Sajjan Jindal-owned JSW Cement for Rs 477 crore

Shares of India Cements slipped 6 per cent to Rs 258 on the BSE in Tuesday's intra-day trade on profit booking, after the company said it has sold its Madhya Pradesh limestone mine, and land for Rs 477 crore to Sajjan Jindal-owned JSW Cement.

India Cements, in an exchange filing, said it has entered into a share purchase agreement with JSW Cement, and has divested the entire shareholding held by it in Springway Mining Private Limited (SMPL) for Rs 476.87 crore. With this, SMPL is ceased to be the wholly owned subsidiary of the company.

SMPL owns limestone bearing land at Pawai Tehsil, Panna District, and is in the process of setting up of a Cement Plant at Gaisabad Tehsil, Damoh District in Madhya Pradesh.

India Cements had started working at the 3 mtpa plant in MP last year with land acquisition. The project also has backward linkages to limestone — a key raw material to make cement.

In May, India Cements had indicated that it was open to selling some of its land to pare debt. As of March 31 this year, the company had a net debt of Rs 3,039 crore. This was an increase of 1.43 per cent over the previous year, when net debt was at Rs 2,996 crore.

At 09:45 AM, the stock was trading 5 per cent lower at Rs 262.35, as compared to 0.31 per cent decline in the S&P BSE Sensex. Despite today's decline, India Cements has outperformed the market in the past one month by gaining 13 per cent, as against 3.5 per cent fall in the benchmark index. In the past three months, it has rallied 55 per cent, as compared to 6 per cent rise in the Sensex.

Meanwhile, India Cements, in its FY22 annual report, said that capex driven fiscal path of the government with a 35 per cent jump in the overall capex plan is expected to provide a fillip to the economy. Further the initiative by the Southern States in giving push to housing, infrastructure development, irrigation, metro rail and road buildings augur well for the industry. With a prediction of good rainfall to continue this year, the rural economy is also expected to do well.

"Cement demand, on the back of the above, can be expected to remain strong and on track with the increased capex and construction activity. However, the mounting cost pressure caused by increase in global price of fuel and oil continues with its consequential impact on the bottom line. Hence, one can be cautiously optimistic for improvement in performance for the cement industry in the near future," the company said.