JK Cement plans up to Rs 3,000-cr capex to boost capacity

Mumbai: JK Cement has set a target of increasing production capacity to about 23 million tonnes per annum in the next two years, from 15 million tonnes now, by expanding its footprints in northern and central India.

“We will maintain and grow our market share in the short term. Apart from the ongoing expansion in Panna, and now in Hamirpur, we already have plans for another 4 MT expansion,” the cement maker’s chief executive officer, Madhav Krishna Singhania, told ET. “We have visibility of reaching around 23 million tonnes per annum by 2023.”

In line with this plan, the company is setting up a new manufacturing plant at Hamirpur in Uttar Pradesh.

“The upcoming manufacturing plant at Hamirpur will have a capacity close to 2 MT per year and is a part of JK Cement’s overall expansion plans…,” Singhania said. “We have an aggressive expansion road map in place and there are plans to enter into other markets.”

The company has earmarked ₹2,970 crore as capital expenditure for adding 2 MT capacity each at the Panna and Hamirpur projects. The investment will be financed partly through debt (₹1,700 crore) and internal accruals, he said. Panna’s capacity will help meet the demands of the markets of Madhya Pradesh, while the production at Hamirpur will be largely for the UP market. On a long-term basis, the company’s facility at Panna has a land bank and raw material to grow the capacity to 15 million tonnes, Singhania said.

JK Cement has about 12 MT of grey cement facility in the north spread across Rajasthan, Haryana, western UP and Gujarat, and 3 MT in Karnataka which caters to southern Maharashtra and parts of Kerala.

The company will be expanding its footprint in the north and the central regions in the coming years and is keen to take over assets through NCLT if it matches the company’s strategies. “While the northern market is very attractive in terms of demand and capacity utilisation, we have the capabilities to become a market leader in the central region,” Singhania said.

The company recently secured a limestone mine in Jaisalmer, but with just the mineral concession it will take at least 5-6 years to set up a new plant. At present, the average utilisation level of JK Cement is 75-80%. The company’s consolidated Ebitda in FY21 was at ₹1,536 crore.

JK Cement is targeting 10% higher Ebitda this year and aims to add at least 2,000 dealerships in the grey cement segment to its network of 5,000.