JK Cement buys Nihon Nirman for Rs. 42 crores

JK Cement has acquired Nihon Nirman from the Industrial Development Bank of India (IDBI) for Rs. 42 crores. The acquisition of the 300,000-tonne Nihon Nirman plant will push up JK Cement’s capacity to produce grey cement to 4.3 mn tonnes per annum. JK Cement would invest another Rs. 33 crores for converting the white cement making plant into a grey cement plant. The production is expected to begin by September and would help JK Cement increase its grey cement capacity at a lower cost. The grey cement would be produced from Nihon Nirman and will be sold in the northern markets, where the company enjoys a strong presence. A team from the Japanese firm Taiheiyo Cement Corporation visited the Nihon Nirman site and calculated that it could produce 300,000 tonnes of grey cement per annum. The plant will cater to Rajasthan market, especially in the Jodhpur and Ganganagar belt. With this new grey cement plant, the company expects to save up to Rs. 1000 per tonne.

Article in the Business Standard.

JK Cement may buy a 2 mt-plant

JK Cement Limited may acquire a 2 mt-plant in the coming year and may even consider diluting a substantial portion of equity for funding the acquisition. JK Cement has an annual capacity of 4 mt for grey cement and 0.4 mt for white cement. It is amongst the top four cement players in northern region along with ACC, Grasim and Gujarat Ambuja, and also the second largest player in white cement market after Grasim. Being a prominent player in the North, J K Cement’s primary markets are Haryana (18.2% market share), Delhi (13.4%), Rajasthan (11%) and Punjab (4%). Promoters’ holding in the company is currently at 62%, while financial institutions and the public hold the rest. In the next two years, assuming cement prices do not fall, internal accruals and cash in hand could give it about Rs 550 crore.

The Indian cement market is the second-largest in the world with a domestic annual consumption of 135 mt and an installed capacity of 160 mt and the overall cement demand in India is expected to grow at a rate of 9% for the next five years.

Read the complete article in Daily News and Analysis.