J K Lakshmi Cement eyeing acquisition

"We are looking for opportunities, but the same should make an economic sense. Being a cement-focused company, whose CAGR capacity growth in the last five years was around 11 per cent against industry's 8.4 per cent, we have to continuously look out for opportunities be it in India or abroad," company's whole-time Director Shailendra Chouksey said.

Currently, J K Lakshmi has two plants in India with an installed capacity of 4.8 million tonnes. Expansions are on to take the capacity to eight million tonnes and it plans to add two million tonnes capacity through an acquisition.

Asked whether the company has any specific region in mind for overseas acquisition Chouksey said, "Two main criterias for the acquisition would be - that region's growth potential and the industrial climate besides the cost of the target company".

Talking about whether the company would look at the Middle East market for a possible acquisition he said, "Personally, I feel the Middle East has reached an economic stagnancy in its growth. The region is very shortly going to face serious surplus situation due to new capacities having been created in Saudi Arabia and UAE."

"We are not averse to the market, if the location is conducive for exports to other countries, including India," he added.

Consumption of cement has a direct bearing on the growth of an economy, according to industry thumb-rule, it grows by one to 1.8 times of the economic growth of a country.
J K Lakshmi is expanding its clinker capacity at Sirohi in Rajasthan, which would complete in the current fiscal and a matching capacity of about 5.5 lakh tonnes would come in Haryana in the next financial year taking the company's capacity to 5.3 million tonnes.
It has also started work on a 2.7 million tonnes new plant at Durg in Chattisgarh, which would go on stream by December 2012 taking the company's capacity to over eight million tonnes.

On funding of the proposed expansions and acquisition, he said that the company has over Rs 700 crore cash surplus. The debt equity position is also comfortable at 0.9:1, which makes it easy for the company to raise funds whenever called for.