JK Cement Ltd launches QIP to raise ₹600 cr for capital expenditure

MUMBAI: JK Cement Ltd on Monday launched a qualified institutional placement offering (QIP) to raise funds from institutional investors for its capital expenditure.

A QIP is a capital-raising tool through which listed companies can sell equity shares, fully and partly convertible debentures, or any securities other than warrants that are convertible into stocks, to a qualified institutional buyer.

JK Cement informed bourses it had set a floor price of ₹732.42 per share for the QIP offering. Its shares closed 2.71% lower at ₹729.65 on the BSE, underperforming a 0.76% fall in the benchmark Sensex at 35,470.15 points.

A person aware of the company’s plans, who requested anonymity, said the cement maker is looking to raise around ₹600 crore through the fresh fundraise.

Edelweiss Financial Services Ltd is managing the QIP.

JK Cement will use the funds to expand its factories.

“We are proposing to enhance the cement grinding capacity at Mangrol and Nimbahera by 1 million tonnes per annum (mtpa) each. In addition, we also intend to increase the existing clinker capacity at Mangrol by 2.48 mtpa. The surplus clinker production will be utilised to serve the split grinding units proposed to be set up at Aligarh and Balsinor, and also to meet the additional clinker requirement at Nimbahera plant due to the brownfield expansion,” the company said.

JK Cement said it is also proposing to set up grinding units at Aligarh and Balsinor. The cement maker’s share sale is the first such issuance in more than three months, as domestic companies have stayed away from primary fundraising due to volatile stock markets. The last QIP was that of Kwality Ltd, which failed to attract sufficient investor interest. So far this year, 24 firms have raised ₹16,076 crore through QIPS, showed data from primary market tracker Prime Database. The activity in 2018 is much lower than the previous year, which witnessed 43 companies raise ₹56,152 crore through this route.