JK Cement Managing Director Raghavpat Singhania dismissed concerns about rising consolidation in the country’s cement sector and said that the company will focus on its expansion into newer markets to deliver growth.
Speaking to Outlook Business on the sidelines of JK Organisation’s 140th founding day celebration, Singhania said that the company is bullish on the prospects of opportunities available in central India. “The northern market where we have been present historically remains attractive to us. We are entering central India. We have a plant in Panna (Madhya Pradesh) and are now foraying into Bihar,” he said.
The company also recently opened a plant in Tanzania as part of its expansion in international markets. He said, “The African market is looking good for us, and we are exploring opportunities in other markets such as Kenya and South Africa. We are able to serve the market well from UAE.”
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JK Cement has an installed capacity of 24 million tonnes of grey cement and the company is planning to reach 30 million tonne capacity in the next two years.
Not Worried About Consolidation
The cement sector was recently in the news due to the race between Adani Group and Aditya Birla Group to expand their capacities. Adani Group completed the $6.4 billion acquisition of Ambuja Cements and ACC in 2022. The Gujarat-based conglomerate’s aggressive bid was seen as an attempt to challenge Birla Group’s dominance in India’s cement sector.
To defend its turf, Aditya Birla’s Ultratech Cement completed the acquisition of its rival India Cement in June this year. Ratings agency India Ratings and Research said in a recent report that the cement sector will witness further consolidation in the near to mid-term. The firm said in its report, “Ind-Ra expects the cement sector to witness further consolidation in the near-to-medium term, given the aggressive medium-term capacity targets of leading players that are unlikely to be fully achieved organically.”
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Talking about the trend of consolidation in the sector, Singhania said it isn’t a new trend and the company will withstand the competition. He says, “The cement market, just like other commodities, follows cycles. We have been in the market for a long time and have survived many cycles, so we are not worried about this consolidation trend. The important thing is to keep our own balance sheet healthy and defend market share in pockets where we dominate.”
The company reported robust earnings in the first quarter as profit after tax surged by 67 per cent compared to the year-ago period to reach Rs 184.82 crore. The revenue increased by 1.62 per cent in the same period to Rs 2,807 crore. The company’s share price has surged by 25 per cent this year.
Moreover, Singhania said the company will also look for appropriate acquisition opportunities to increase its capacity. JK Cement completed the acquisition of Toshali Cements in Odisha for Rs 90 crore earlier this year in February.
In addition to the cement offering, the company also forayed into the paints business two years back with a Rs 600 crore investment plan for a five-year period. The company has spent Rs 400 crore so far. “The goal is to become a one-stop solution for building homes in the country,” Singhania noted.
