JK Cement mulls 2Mt plant acquisition

JK Cement mulls 2Mt plant acquisition
Published: 02 January 2007

In the midst of buyouts of Indian cement firms by foreign companies, home-grown JK Cement Ltd is keen to add a capacity of around 2Mt via an inorganic route.

Going by sources, the Rs 900-crore company is considering an acquisition next fiscal and may even consider diluting a substantial portion of its equity depending on the value it gets from the target firm.

Promoters’ holding in the company is currently at 62%, while financial institutions and the public hold the rest. In the next two years, internal accruals and cash in hand could give it about Rs 550 crore, assuming cement prices do not fall.

JK Cement has an annual capacity of 4 mt for grey cement and 0.4Mt for white cement.

A K Saraogi, CFO, J K Cement, told DNA Money, “The company is not selling any kind of stake to any foreign company, but we are looking for acquisitions and may consider diluting substantial portion of equity depending on the value.”

J K Cement is amongst the top four cement players in northern region along with ACC, Grasim, GACL and also the second largest player in white cement market after Grasim.

Analysts said acquisition at this point of time will definitely help JK Cement as demand is growing and the demand-supply mismatch will continue to be around 5%.

Moreover, tge Commonwealth Games will lead to an additional demand of 7Mt by 2010.