JK Cement greenfield plant in K'taka by 2009

J K Cement is likely to have a new grey cement plant, with a capacity of 3 million tonne per year, ready in Karnataka by 2009, said a senior official. This would be the first greenfield cement project in a long time in South India, the largest market for cement in India and the fastest growing region this year.

A company in the group has already acquired the lease rights over limestone mines (the raw material for cement manufacture) near Belgaum in Karnataka.

At present, J K Cement has initiated a study to examine different aspects of the project, said Yadupati Singhania, managing director and CEO of the company, on the sidelines of a press conference to announce its forthcoming public issue of equity. The public issue aims to raise money for J K Cement's existing factories in Rajasthan.

The South Indian cement market is the largest in India. In April-December 2005 period, cement despatches in South India accounted for about 28 per cent of the total despatches of 95.2 million tonne.

In the same period, cement despatches in South India grew by 17 per cent, outstripping the national growth rate of 8 per cent. The faster growth in South India, however, has taken place in the backdrop of a fall in despatches the preceding year.

With a plant near Belgaum, situated in the northern part of Karnataka, J K Cement has the option of selling cement in a state with a large demand such as Maharashtra.

For the moment, however, J K Cement has begun work to fund a brownfield expansion and install new power generation sources. The company has budgeted for Rs 237 crore on the projects, of which the power project would require an investment of Rs 205 crore.

J K Cement's current grey cement capacity is 3.55 million tonne per year, which is spread over two plants in Rajasthan.

The company aims to increase the total capacity to 4 million tonne per year, using the money raised through the public issue.

In order to bring down the money spent on power, the company plans to install a 20 MW petcoke-based captive power plant and generate another 13.2 MW through a waste-heat recovery power plant.

Another change on the company's agenda is the replacement of an existing turbine with a new 10 MW turbine.