JK Lakshmi’s arm to partly finance 15-bln-rupee capex via equity

Wednesday, Dec 30, 2020


By Kanchan Yadav 


NEW DELHI JK Lakshmi Cement Ltd's arm Udaipur Cement Works Ltd is aiming to partly finance its 15-bln-rupee capital expenditure plan for the next three years by raising fresh equity capital, Chief Financial Officer Sudhir Bidkar told Cogencis.


The company plans to raise about two-third of the amount through debt. Internal accruals and term loans will also be used for capital expenditure.


"We expect the buoyancy in the sector to continue for some more time and over the next few years we expect the incremental demand to be outperforming the incremental supply," Bidkar said in an interaction with Cogencis.


Although cement volume growth softened in November to 5% on year from double-digit growth in October and September, analysts pointed to 25.7% jump in cement freight carried by the Indian Railways in November to suggest that demand momentum is picking up.


Udaipur Cement will also put up an additional clinker line of 1.5 mln tn and cement grinding capacity of 2.5 mln tn, which is expected to be completed in the first quarter of 2024-25 (Apr-Jun).


The arm is also implementing a "balancing scheme", through which the company will increase its clinker capacity by 0.3 mln tn to 1.5 mln tn and cement capacity by 0.6 mln tn to 2.2 mln tn by March, the company had previously said.


While JK Lakshmi Cement is focusing on capacity enhancement at Udaipur Cement, it does not intend to bloat its balance sheet with debt and plans to reduce overall debt by 2.5-3.0 bln rupees per year over the next two to three years through internal accruals.


As on Sep 30, Udaipur Cement had a cash balance of 232.3 mln rupees, the company said. JK Lakshmi had a net debt of 7 bln rupees as on Sep 30, while Udaipur Cement had a net debt of 4.80 bln rupees.


At 1412 IST, shares of JK Lakshmi Cement were up 1.7% at 338.95 rupees on the National Stock Exchange while those of BSE-listed Udaipur Cement were up 1.5% at 22.20 rupees.




IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Aditya Sakorkar


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