'Building a war chest essential for expansion'

'To sustain our growth trajectory, we must continue to explore and capitalise on growth opportunities.'

In preparation for its upcoming initial public offering (IPO), JSW Infrastructure aims to retire debt and fund capital expenditure (capex).

Arun Maheswari, joint managing director and chief executive officer of JSW Infrastructure, in an interview with Amritha Pillay/Business Standard, shares insights into how the company intends to create a war chest to seize future growth opportunities in the sector.

Can you outline your plans for deploying the Rs 2,800 crore you intend to raise?

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.

Another Rs 900 crore will be earmarked for debt repayment, while the remainder will primarily serve general corporate purposes.

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?

To sustain our growth trajectory, we must continue to explore and capitalise on growth opportunities.

This requires substantial capex, including our planned greenfield ports.

We are also eyeing opportunities under the government's privatisation programme.

Therefore, building a war chest is essential for our continued expansion.

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.

As we approach an election year, do you anticipate any political risks affecting your growth prospects?

Firstly, this sector is considered a sunrise sector. It's widely understood that growth in this sector is crucial.

Economic activity continues, regardless of elections.

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.

One concern specific to JSW Infrastructure is its heavy reliance on captive cargo from the group. How do you plan to address this?

I would assert that having captive cargo is one of our strengths.

Any port requires a solid anchor customer, and having one within our group, particularly with JSW Steel's proven growth record, is advantageous.

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.

Regarding the war chest you are building for growth, will it also target acquisitions?

We wouldn't be averse, if the sector, location, and returns are right.

If the sector and location are favourable, and a growth opportunity exists, we do not mind putting a tick in the box.

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?

Our primary focus will be on container, gas, and liquid segments, given our substantial presence in bulk cargo.

Over half of your volume comprises coal. How do you plan to mitigate any volume slowdown due to the transition to cleaner fuels?

I do not foresee coal becoming obsolete in the near future.

India's energy efficiency and the industrial growth we aspire to achieve currently lack a practical and economical substitute for coal.

Coal will likely remain relevant for at least the next three decades.

Feature Presentation: Aslam Hunani/Rediff.com