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JK Cement plans to invest up to Rs 1,500 crore in the next 3-4 years to hike production capacity of grey cement by over 30 per cent to 14 million tonnes per annum (mtpa), says a top company official.
The company’s options are either setting up new units or expand at the existing plants to tap growth opportunities in the grey cement segment, with demand primarily expected to come from the government’s push for big infra projects, besides uptick in rural housing and good monsoon.
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“We are working to increase our installed manufacturing capacity for grey cement from 10.5 mt to nearly 14 mt at an investment of ₹1,000-1,500 crore,” said JK Cement Business Head Rajnish Kapur.
The exact investments would depend on whether the company expands capacity through greenfield or brownfield investments, he pointed out.
“We are in the process of evaluating both these options and a final call should be taken soon,” Kapur added.
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The company is in the process of evaluating expansion opportunities at its Rajasthan-based Mangrol plant. It is also looking to add one plant in Panna, Madhya Pradesh, which would be a greenfield project, Kapur added.
In 2014, JK Cement had invested in expanding capacity at Mangrol and split—grinding unit at Jhajjar.
“We have utilised those assets well and now we are looking for brownfield as well as greenfield expansion and we are working on that,” Kapur said, adding that the company was “looking to add capacity at the Rajasthan plant again where we have environmentally licences and mining leases“.
Asked about funding of the projects, he said: “It would be a mix of internal accruals and some through financial institutions.”
On demand drivers for grey cement, Kapur said the government’s push towards infrastructure projects, along with good monsoon, would bring an overall growth to the sector.
“Now, projects like smart cities, Sagarmala and housing for all are being taken up and we would have all the growth and demand for the cement industry,” Kapur hoped.
With demand expected to increase, he said JK Cement is also working to ramp up its sales network.
“In the last three years, we have done a lot of work and have invested in sales network specifically just not to improve our presence in the market, but also to strengthen our brand positioning,” he added.
The company, which will host the 26th edition of the Architect of the Year Awards in Coimbatore on September 17, had reported a 30.4 per cent rise in its net profit during the April-June quarter, mainly on account of higher revenue.
JK Cement, part of the JK Organisation conglomerate, had revenue of ₹ 4,420.71 crore in 2016-17.