Star Cement receives government subsidies to reduce debt

Star Cement has received INR2bn (US$29.7m) towards a subsidies claim from the central government. The company intends to use the amount to further reduce its debt.

Earlier in April company had received IN800m (US$11.8m) of subsidies and also used it for debt reduction. The total debt for the company following the payment of INR800m is expected at INR3200m, including long-term and short-term loans. The debt will further come down significantly as the company intends to utilise the entire amount of the latest claim towards debt repayment.

The total subsidy (including freight and capital) backlog for Star Cement currently stands at approximately INR420m and is expected to be received by the end of FY18-19).

The cement producer has a capacity of 4.4Mta, which it is planning to increase by a further 2Mta by FY20E end. The company is also expanding in the nearby markets of West Bengal, Bihar and Jharkhand.