India cements shares fall 10% after selling Springway Mining to JSW Cement

India Cements shares fell 9.93% to Rs 247.7 on the BSE in intraday trade Tuesday after the company announced the sale of its Madhya Pradesh limestone mine and property to JSW Cement for Rs 477 crore.

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In an exchange filing, India Cements stated that it has entered into a share purchase agreement with JSW Cement and has divested its whole stake in Springway Mining Private Limited (SMPL) for Rs 476.87 crore. As a result, SMPL is no longer the company’s wholly-owned subsidiary.

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SMPL has limestone-bearing property in Pawai Tehsil, Panna District, and is establishing a cement plant in Gaisabad Tehsil, Damoh District, Madhya Pradesh.

Last year, India Cements began development on the 3 mtpa project in MP by acquiring land. 

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India Cements said in May that it was willing to sell part of its land to reduce debt. The business has a net debt of Rs 3,039 crore as of March 31, this year. This is a 1.43% increase over the previous year when net debt stood at Rs 2,996 crore.

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“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 an increase in the 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.

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Meanwhile, India Cements stated in its FY22 annual report that the government’s Capex-driven fiscal path, with a 35% increase in the entire Capex plan, is projected to deliver a boost to the economy. Furthermore, the Southern States’ initiative to boost housing, infrastructure development, irrigation, metro rail, and road construction bodes well for the sector. The rural economy is likely to fare well this year since favourable rainfall is predicted to continue.