India’s JK Cement Ltd plans to foray into the south Indian cement market with a new greenfield cement plant with annual capacity of up to 3Mta in Karnataka state, the company’s chief financial officer said. "We are planning to enter the south Indian market with a fresh greenfield capacity of around 2.5 to 3Mt in Karnataka," AK Saraogi told Dow Jones Newswires in a recent interview.
He said the total project cost is estimated at INR7.5 billion. The plant is expected to be commissioned by the last quarter of the next fiscal year which begins April 1, 2007. "We are currently undertaking feasibility and technological studies for the project," said Saraogi, who is also president for corporate affairs.
JK Cement, which makes both gray and white cement, supplies to the northern Indian markets. Saraogi said JK Cement will also set up a 1Mta grinding unit at a cost between INR700 million and INR800 million, which will further increase its grey cement-making capacity to 4.2Mta. Currently, the company is in the process of expanding gray cement capacity by 0.5 million tons to 4Mt, which is expected to be completed by June.
"The grinding unit will marginally expand capacity, but will help substantially in cost savings," Saraogi said. JK Cement is still finalizing the location of the grinding unit, but says it will be located close to one of its units in north India. Saraogi also said the company expects total revenue for the current fiscal year to be around INR12.5 billion to INR13 billion. Better prices, cost savings and the partial benefit from the capacity expansions will result in improved revenues, he said.
The company plans to produce 3.8Mt of grey cement this fiscal year compared with 3.5Mt in the previous year. Saraogi said that the company’s captive power projects are on track.