Delhi-based Jaypee Associates is looking at acquiring a 4-5Mt cement plant in the Middle East. If the deal goes through, it would be the first acquisition abroad of a cement plant of this size by an Indian company.
"We are examining a proposal to acquire a cement plant in West Asia," Jaypee Associates executive chairman Manoj Gaur told ET. He refused to give details about the plant.
If Jaypee acquires the company, it will give it a foothold in the West Asian region where the boom in construction sector has led to big demand of cement. Some Indian cement makers such as Grasim and Ambuja Cement and several Pakistani manufacturers have been exporting to the Middle East and realising impressive margins.
Even as Indian cement makers have tapped overseas markets with their product, there hasn’t been any significant investment in cement manufacturing facilities abroad, so far. Recently, a mid-size cement maker Binani Cement bought 49% stake in a clinker manufacturing plant in Shandong province in China for $11 million. China-based Shandong Rongan Group owns the plant that produces 0.4 million tonne of clinker, a raw material for cement.
"It would make sense for us to acquire a cement plant in the Middle East as we can easily supply that with clinker produced in our plant in Gujarat," said Mr Gaur. Jaypee is setting up clinker and cement units
Jaypee group, which is present in a host of sectors including power, real estate and construction, is quite upbeat on cement. It is rapidly scaling up its cement production capacity, which is 7 million tonnes per annum at present. It expects to achieve a capacity of 25 million tonnes by 2010 and 30 million tonnes by 2011. The company expects to achieve a turnover of Rs 12,000 crore for its cement business by 2010.
Jaypee Associates has also got a captive coal block recently alloted for use in cement production. It plans to have captive power plants totalling up to 90 mw to service all its cement units.