JK Cement to tap market to fund expansion

JK Cement is entering the capital market to raise about Rs 300 crore to finance its expansion plan.

The second largest domestic white cement manufacturer will invest Rs 220 crore to set up a 13.2 mw plant based on the waste heat recovery technology.

The plant will use the waste heat emitted in the manufacture of cement. The Kanpur-based company will be among the first in the cement sector to use this technology.

The company is also setting up a 20 mw captive power plant based on petcoke. "The new plants will improve our margins, as now fuel has 20 per cent share in the overall costs," said Yadhupati Singhania, promoter and managing director of JK Cement.

Commissioning of the captive plants in June next year will bring down the cement company's energy costs to Rs 1.35 per unit from Rs 4.5 per unit now.

At present, it has energy capacity of 40 mw, 15 mw of which is coal-based and the rest diesel-based. Given that oil prices are still high, the new plants will reduce its fuel costs.

JK Cement is also poised to increase its cement manufacturing capacity from 3.8 million tonne (mt) to 4.4 mt. "Our grey cement capacity will increase to 4 mt from the present 3.5 mt, and the white cement capacity will increase by 1 lakh tonne to 4 lakh tonne," said A K Saraogi, president (corporate affairs) and chief financial officer.

The company, whose two grey cement-manufacturing facilities are based in Nimbahera and Mangrol, and the white cement unit is located at Gotan "" all in Rajasthan, is investing about Rs 32 crore to enhance its capacities.

JK Cement will also replace an existing 7.5-mw turbine with a new 10-mw turbine at Bamania in Rajasthan, at a cost of around Rs 8.5 crore.

The company's public issue of two crore shares will open for four days effective February 21. The price band will be announced later.

Of the total issue, 18 lakh equity shares will be reserved for its existing shareholders and two lakh for employees. DSP Merrill Lynch and ICICI Securities are the book-running lead managers to the issue.