After the Rs 459-crore acquisition of UP State Cement, Jaypee Cement is now looking at an aggressive expansion through the organic route. The company plans to invest close to Rs3500 crore for significantly increasing its production capacity from the current 7Mta. In the process, the company will set up three greenfield cement facilities at Solan in Himachal Pradesh, Siddhi in Madhya Pradesh, and Bhuj in Gujarat.
"It’s not that we won’t look at acquisitions. But our clear focus for the next couple of years will be on organic growth," Manoj Gaur, MD, Jaypee Group, told ET. The proposed 15-million tonne expansion plans will also include capex in the existing facilities. Prior to UP cement acquisition, the group had three facilities, two in Rewa and one in Bela, MP, adding up to an aggregate capacity of 7 million tonnes per annum. To this, another 2.5-million tonne capacity will be added by the UP cement facilities.
UP State Cement Corporation, which was a sick company at the time of acquisition, has three plants located at Dala, Chunar and Churk in Mirzapur district of the state. The upcoming greenfield project at Solan is expected to have a 3-million tonne production capacity. "Also, we have set up three captive thermal power plants. This has resulted in significant cost reductions, thus strengthening our market position," Mr Gaur said.
Jaypee group is the India’s fourth-largest cement company, contributing almost 5% of the country’s total production. It’s now gearing up to compete with relatively larger players in the market, the Holcim-Associated Cement Companies-Gujarat Ambuja combine, which has a capacity of 33.4 million tonnes and the Aditya Birla group, with 31 million tonne capacity. Jaypee group is likely to face tough competition in the future from global players like Hiedelberg, Ital Cementi and Lafarge, which are aggressively sprucing up their India presence.