{"id":43578,"date":"2023-10-03T05:39:21","date_gmt":"2023-10-03T05:39:21","guid":{"rendered":"https:\/\/lethal-industry.com\/?p=43578"},"modified":"2023-10-03T05:39:21","modified_gmt":"2023-10-03T05:39:21","slug":"building-a-war-chest-essential-for-expansion","status":"publish","type":"post","link":"https:\/\/lethal-industry.com\/business\/building-a-war-chest-essential-for-expansion\/","title":{"rendered":"‘Building a war chest essential for expansion’"},"content":{"rendered":"
‘To sustain our growth trajectory, we must continue to explore and capitalise on growth opportunities.’<\/strong><\/p>\n In preparation for its upcoming initial public offering (IPO), JSW Infrastructure aims to retire debt and fund capital expenditure (capex).<\/p>\n Arun Maheswari<\/strong>, joint managing director and chief executive officer of JSW Infrastructure, in an interview with Amritha Pillay<\/strong>\/Business Standard<\/em>, shares insights into how the company intends to create a war chest to seize future growth opportunities in the sector.<\/p>\n Can you outline your plans for deploying the Rs 2,800 crore you intend to raise?<\/strong><\/p>\n Of the Rs 2,800 crore, approximately Rs 1,200 crore will be allocated to capex, including brownfield projects such as establishing a liquefied petroleum gas plant at the Jaigarh port and doubling the capacity of a container terminal, among others.<\/p>\n Another Rs 900 crore will be earmarked for debt repayment, while the remainder will primarily serve general corporate purposes.<\/p>\n With the Rs 900 crore debt repayment, your company will become debt-free. The IPO does not involve any private equity or partial promoter stake exits. What is the rationale behind entering the market at this time?<\/strong><\/p>\n To sustain our growth trajectory, we must continue to explore and capitalise on growth opportunities.<\/p>\n This requires substantial capex, including our planned greenfield ports.<\/p>\n We are also eyeing opportunities under the government’s privatisation programme.<\/p>\n Therefore, building a war chest is essential for our continued expansion.<\/p>\n The economy is on an upswing, entry barriers are high, and the number of players is limited. Having a strong balance sheet positions us to benefit from this upswing.<\/p>\n As we approach an election year, do you anticipate any political risks affecting your growth prospects?<\/strong><\/p>\n Firstly, this sector is considered a sunrise sector. It’s widely understood that growth in this sector is crucial.<\/p>\n Economic activity continues, regardless of elections.<\/p>\n The business stands on its own merits, with the economy growing at 6-8 per cent, and the port sector outpacing the overall economy’s growth rate.<\/p>\n One concern specific to JSW Infrastructure is its heavy reliance on captive cargo from the group. How do you plan to address this?<\/strong><\/p>\n I would assert that having captive cargo is one of our strengths.<\/p>\n Any port requires a solid anchor customer, and having one within our group, particularly with JSW Steel’s proven growth record, is advantageous.<\/p>\n It’s challenging to predict the precise mix of captive and third-party cargo in the future, but we aim to maintain a healthy balance between the two.<\/p>\n Regarding the war chest you are building for growth, will it also target acquisitions?<\/strong><\/p>\n We wouldn’t be averse, if the sector, location, and returns are right.<\/p>\n If the sector and location are favourable, and a growth opportunity exists, we do not mind putting a tick in the box.<\/p>\n Can you provide insights into the current state of the port sector in terms of volumes, and from which sectors do you anticipate the most growth?<\/strong><\/p>\n Our primary focus will be on container, gas, and liquid segments, given our substantial presence in bulk cargo.<\/p>\n Over half of your volume comprises coal. How do you plan to mitigate any volume slowdown due to the transition to cleaner fuels?<\/strong><\/p>\n I do not foresee coal becoming obsolete in the near future.<\/p>\n India’s energy efficiency and the industrial growth we aspire to achieve currently lack a practical and economical substitute for coal.<\/p>\n Coal will likely remain relevant for at least the next three decades.<\/p>\n