JK Lakshmi Cement Ltd will look to invest about Rs 8,000 crore over a six-year period, between 2024 and 2030, to ramp up capacity to 30 million tonnes per annum (mtpa) from the projected 18 mtpa capacity at end-FY24.
Capacity addition could be both organic (greenfield or brownfield expansion) and inorganic (such as acquisitions).
The company has embarked on land acquisitions for greenfield opportunities at Nagaur (Rajasthan) for north India and Kutch (Gujarat) for west India markets.
Arun Shukla, President and Director, JK Lakshmi Cement Ltd on cement industry outlook
Ongoing expansion plans
According to Arun Shukla, President and Director, JK Lakshmi Cement Ltd, the company is currently expanding capacity at its subsidiary, Udaipur Cement Works. It is a brownfield expansion with a clinker and cement-making capacity of 1.5 mtpa and 2.5 mtpa, respectively, at an estimated capex of Rs 1,650 crore.
The company has spent Rs 850 crore till FY23; it expects the clinker and cement capacity to be commissioned over the next few quarters.
“So the plan is to exit FY24 with an installed capacity of 18 mtpa, which includes expanding Udaipur unit by 2.5 mtpa. Then we ramp up to 30 mtpa by 2030,” he told businessline.
Post expansion, the company will be among the top 10 cement-makers in India.
In a bid to expand presence in central India, JK Lakshmi Cement has recently entered east-central Uttar Pradesh.
It has an additional grinding facility (on rent), and a monthly cement production capacity of 15,000–20,000 tonnes. This will be ramped up as its Udaipur unit becomes operational.
New limestone mines in Rajasthan and Gujarat are yet to start operations. It also has significant proven reserves at its operational limestone mines in Rajasthan, allowing for the brownfield expansion.
Deleveraging balance sheet
“Over FY19-23, JK Lakshmi Cement generated healthy free cash flows, which helped it to deleverage its balance sheet. At standalone, JKLC became net cash positive in FY23,” Motilal Oswal Financial Services said in a report.
Cumulative standalone free cash flows stood at Rs 2,440 crore in FY23.
Its consolidated net debt is estimated to decline to Rs 500 crore by FY25 from Rs 1,000 crore as of March 2023, the brokerage firm added.
According to Shukla, demand is expected to improve by 7-8 per cent in FY24 following the Centre’s push towards infra, and a boom in housing and construction activities. “Price is expected to move in tandem with demand,” he said.
Nearly 62-65 per cent of demand is generated from housing sector, 20–25 per cent is from infra, while the rest is from industrial and commercial activities.