JK Lakshmi to invest in capacity expansion, India

JK Lakshmi Cement is ensuring it is well placed for a revival in future domestic demand by planning to spend US$386m in the next financial year on expanding capacity, the Wall Street Journal reports.

Vinita Singhania, managing director of JK Lakshmi Cement, said the  producer plans to expand capacity to 8-9Mt by the end of the next fiscal year. Current capacity stands at 4.8Mt and is likely to rise to 5.3Mt by 31 March 2011, the end of the current fiscal year. JK Lakshmi is also currently constructing a new plant in central India which would likely start operations by October or November 2013.

The Indian cement sector has experienced a challenging fiscal with demand growth slowing and utilisation rates dropping while production costs continue to rise.

However, Ms Singhania, is hopeful that demand will pick up in the near-term with increased government spending: "The government has slowed spending on infrastructure projects, while demand for housing has been hit by a sharp rise in interest rates. However, I am hopeful that spending by the government could revive in January-March and we can at least have 5-6 per cent growth this fiscal year."

In the last fiscal, FY10-11, India saw demand growth slow to 4.6 per cent following double-digit growth of 10.54 per cent in the previous fiscal.