BS reported that North India based JK Lakshmi Cement has dropped its plan of last year to acquire a cement company in Egypt for INR 800 crore.

Mr Shailendra Chouksey director of JK Lakshmi Cement said that "We had been looking at capacities but we haven't been able to find one so far. Also, international economic conditions are not conducive and it will not give us the returns as expected. So, we are not looking at that option any more. In India, the valuations local players are seeking is very high. It is cheaper to put up greenfield (new) capacity than acquiring one.”

Part of the Hari Shankar Singhania group, it has targets to achieve a total capacity of 10 million tonnes per annum by 2013-2014. It is setting up a split grinding unit of 0.55 million tonnes per annum in Haryana, which would increase production capacity to 5.3 million tonnes per annum by the end of the year. It is also setting up a 2.7 million tonnes per annum factory at Durg in Chhattisgarh, for INR 1,200 crore, and a 1.5 million tonnes per annum facility at Udaipur.

Mr Chouksey said that “The land acquisition process for our Durg plant has started. By October 2013, we will achieve a production capacity of eight million tonne per annum (by the entire group).

Mr Chouksey added that “The fundamentals of cement consumption have been lacklustre this year. Last year, the growth was around 4 to 5% and in the first quarter of this financial year, the country has reported flat or negative growth. There is an underlying fear as manufacturing, construction and realty sector are all going through a very slow phase.”

JK Lakshmi mainly sells in the northern market and in Gujarat and Maharashtra. Its power and fuel costs per tonne increased by 17% quarter on quarter and 11.7% YoY. Freight costs per tonne also grew by 14.8% for the first quarter and 16% quarter on quarter due to higher diesel costs.

(Sourced from BS)