JK Cement Ltd. will invest more than INR7.5bn to set up its fourth plant in the southern Indian state of Karnataka to increase marketshare in the region, a senior official said.
The company hopes to commission a 3Mta grey cement plant by September or October 2008, A.K. Saraogi, JK Cement’s president for corporate affairs and chief financial officer, told Reuters over phone from Kanpur.
"There is an infrastructure and construction boom in the region. We are looking at the Maharashtra market and at Karnataka, which is not a (cement) surplus state," Saraogi said.
The Kanpur-based firm has two grey cement plants and a white cement plant in the northern state of Rajasthan. It hopes to leverage its existing white cement distribution network in southern India to start selling grey cement from the new plant.
About 60 percent of the land for the plant has been acquired and the company hopes to complete land acquisition by December.
Saraogi said half the project’s cost would be from internal accruals and the rest would be raised "through a basket of domestic and foreign borrowing instruments" to be decided in the next 2-3 months.
On Wednesday, JK Cement said it had bought over an unlisted group company, Jaykacem Ltd., that had rights to mine up to 82 million tonnes from limestone quarries in Karnataka, saving costs for the proposed plant.
JK Cement has annual capacity of 4Mt for grey cement and 0.4Mt for white cement. It is also building a 55 megawatt captive power plant to halve its energy costs, he said..
The company reported a 843 per cent jump in net profit for the April-June quarter due to a surge in sales and higher realisation from a price increase late last year.