JK Cement's Rs 1,200 cr plan to double capacity

Kanpur-based JK Cement Ltd is planning to invest about Rs 1,200 crore in the next 3-5 years for doubling its manufacturing capacity of grey cement which will include setting up of greenfield units in Karnataka and North India.

"We have plans to double our grey cement capacity to eight million tonnes in the next 3 to 5 years and are exploring possibilities for putting up greenfield plants in Karnataka and near Delhi," the company's Chief Financial Officer AK Saraogi.

"The capacity of the Karnataka plant would be in the range of 2.5-3 million tonnes," he said, adding that investments could be in the range of Rs 600-750 crore.

"We are, at present, doing the techno-feasibility study for the project. The company is also exploring possibilities of setting up a grey cement plant in areas close to Delhi with a capacity of 1.5-2 million tonnes which would involve an investment of Rs 400 crore, besides installing a grinding unit to produce flyash cement," he said.

"We are looking for a site near Delhi to install a flyash cement unit with an investment of about Rs 50 crore," he added. Saraogi said the company will fund the expansion through internal accruals and debt.

The company plans to enter into some sort of arrangement with the group company Jaykaycem, which has a mining lease at Bagalkot district in Karnataka.

JK Cement, which has two grey cement plants at Nimbahera and Mangrol in Rajasthan, is expanding its grey cement production capacity to four million tonnes, which would be over by the end of this month.

Under the ongoing expansion, the company's white cement capacity at the Gotan plant in Rajasthan would increase to 400,000 tonnes.

"The company would also increase the production of blended cement to 65 per cent from last year's 40 per cent," Saraogi said.

JK Cement's net profit for the last fiscal stood at Rs 32.6 crore over the turnover of Rs 1,108 crore.

It expects to double its net profit this fiscal on account of several positive factors like higher production of blended cement, savings in power with replacement of 10 Mw turbine by December and the full year benefit of surge in cement prices.

"At present, the company incurs a cost of about Rs 140-150 crore in power. But after the completion of ongoing power projects by June 2007, the capacity will increase to 55 Mw from 14 Mw. This would save the company about Rs 70-80 crore," Saraogi said.

The firm also plans to sell carbon credit for the blended cement product and the waste heat recovery plant and earn about Rs 15 crore per annum from the next fiscal.