JK Lakshmi Cement Ltd has reported a 33 per cent increase in net sales in the second quarter of the current fiscal to Rs 354.13 crore against Rs 265.96 crore in the year-ago period. This hiked the net profit 12.67 per cent, from Rs 5.76 crore in second quarter of last year to Rs 6.49 crore in the corresponding period this year.

“Compared to last year’s second quarter, the demand is better this year owing mostly to the rural and tier two cities. In metros, we didn’t find very good growth,” said Mr Shailendra Chouksey, Wholetime Director, JK Lakshmi Cement.

JK Lakshmi Cement registered a healthy 19 per cent growth in volumes compared to the sector’s growth of 6.5 per cent.

Owing to the hikes in petroleum prices, the logistics cost and, hence, the total cost of production went up for the company. The total expenditure stood at Rs 338.54 crore, up 31.8 per cent from Rs 256.88 crore in the corresponding quarter last year.

Expansion plans

The company has put aside a total capital expenditure of Rs 1,500 crore over the next three years for expansion.

“We are working on our grinding unit in Haryana which will come up by March 2012 and increase our production capacity from 4.7 million tonne to 5.3 million tonne. This is to consolidate our position in Haryana and neighbouring markets. The company is also working at a greenfield project at Durg, Chhattisgarh, which will be ready by October 2013. This will further take our production from 5.3 mt to 8 mt,” said Mr Chouksey.

The company said that it wants to consolidate its footprints in the eastern markets, where the growth prospects are better than other zones. For the Durg plant, the total investment is pegged at Rs 1,250 crore, for which the company will raise a debt of Rs 850 crore and fund the remaining Rs 400 crore through internal accruals. The investment at the Haryana grinding plant is pegged at Rs 100 crore, for which the company will raise a debt of Rs 70 crore and the rest Rs 30 crore will be internally funded.

The company also plans to set up four ready-mix concrete plants at Kota, Ahmedabad, Chandigarh and Mumbai, by end of this year. The investment for this would translate into Rs 7-8 crore per plant.

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