India: JK Cement won’t sell stake to fund expansion plans

India: JK Cement won’t sell stake to fund expansion plans
Published: 19 August 2010

JK Cement has been on an expansion spree. It plans to up capacity across the North by brownfield expansion and is also looking to raise debt of INR800 crore to part finance the setting up of a plant in the middle-East. But, Group Executive President RG Bagla says the company does not intend to sell any stake even for expansion as of now. "There are three projects on anvil and we are exploring all financial options," he adds.

Below is a verbatim transcript of RG Bagla’s interview on CNBC-TV18.

Q: Can you take us through your new capacity expansion plans and when the new capacity from the South gets commissioned?

A: It has already been commissioned in September-October 2009, but it is stabilising. It is a big plant and it takes time maybe in six months or so. Unfortunately because of the rains, it has taken more time, but now it is in the last stages of stabilising.

Q: You are trading at fairly subdued valuations. Are you open to some kind of stake sale to another player at all because it seems like an attractive asset in the cement space?

A: Not to my mind.

Q: Even in order to fund these expansion plans you would not look to hive off some equity or get a financial or strategic investor in?

A: We have got in mind two-three projects, one in a foreign country and two in the country. As soon as we reach the last stage of government clearances then definitely we will go for different instruments of financing. Presently there is no such hurry.

Q: Bottomline took quite a hit this quarter like many of your cement peers. What do you expect to finish the year with in terms of revenues and profits?

A: There is a capacity overhang and in July the utilisation country wise was only 80 per cent of the capacity. Over a period of last two years almost 100Mt new capacity has come. It is stabilising in its own time but definitely it is having an overhang effect in certain zones like South, West, while it has crept into the North zone. But the North zone is no so affected as yet. In the South zone plant, it will take one month more. Then hopefully monsoons will get over and from October we do hope new construction starts from the auspicious time.