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Jaiprakash Associates to increase capacity by 30 million t

World Cement,

Financial news items from India report that Rahul Kumar, Chief Financial Officer of Jaiprakash Associates has announced the company will invest about Rs 10 000 over the next three years, including Rs 3000 crore in the current fiscal year, to increase the company’s annual cement capacity to 50 million t.

The company has 19 million t of installed capacity at its 12 plants across the northern, central and western parts of the country, as well as a 2.2 million t facility within the Bhilai Steel plant in a joint venture with Steel Authority of India Ltd (SAIL). It is understood that the proposed investment will be funded through a mix of debt and equity in the ratio of 70:30, but Jaiprakash does not have “any immediate plans” to raise equity to finance the debt part.

“We have new plants coming up in almost all parts of the country. This will take our installed capacity to 34 million t by the end of the current fiscal year”, said Kumar. When asked about whether the company had plans for acquisitions either in India or abroad, he said, “we will be open to evaluating any opportunities that may come our way”.

India’s installed cement capacity, as of March 2010, stood at about 240 million t, though actual production last year was around 200 million t. According to Crisil Research, about 35 million t of capacity is likely to be commissioned in 2011-12, as against 50 million t in 2010-11. Ratings agency Fitch had, in a recent report, also said that the country would be adding 50 million t capacity in 2010, taking the total to around 300 million t, resulting in a shrinking of capacity utilisation of the industry to 75% from around 87% in 2009.

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