Q. What are JK cement's expectations regarding the Union Budget of 2018? Which are the areas you feel the government should focus on this year?
A. Given the fact that at a slab of 28 percent, cement is one of the highest taxed industries right now, some sort of tax relief would be most welcome. The cement industry, I believe is one of the core industries capable of boosting the Indian economy and as part of this industry I expect the Government to consider our legitimate demand of bringing down the Goods and Services Tax slab. Lately, there has been a visible rise in fuel and power prices which led to a massive increase in the input costs. In order to boost consumption, it will be helpful if the input costs are somehow kept in check. Hopefully, the Union Budget of 2018, will provide further impetus on developing rural infrastructure. We expect urban infrastructure, housing, water and sanitation needs to be discussed at the new budget announcement.
Q. What is JK cement looking forward to this financial year?
A. JK Cement is planning to add up to 8 million tonne per annum (MTPA) capacity in the next five years, taking the total installed capacity to somewhere around 18 MTPA for grey cement. We are planning to expand to 3.5 to 4 million tonne in Brownfield and similar quantity in Greenfield with an overall expenditure of around Rs. 5000 crore. The Brownfield expansion can be announced in 2018. However, we are keeping the options of M&A route open if we get the right opportunity which suits our plans with attractive valuation.
Q. What are the challenges JK cement faces with regard to capacity building?
A. Overall, the cement industry has always been rising to the occasion by building up the required capacity for catering to India’s ever growing requirements. Today, at JK cement, we have a capacity of over 412 MTPA against a demand of a mere 323 MTPA. Capacity expansion in cement needs huge investments and planning. We may project demand and ramp up capacity but the demand may not happen. That has been the case in the last five-six years. The industry has faced a general slowdown that has affected everybody. Besides this, huge investments have been made to make old plants comply to the new environmental norms. Given that per capita cement consumption in India is approximately 190 Kilograms per year as compared to our peers who have a much higher consumption, we are hopeful that the demand will catch up with the supply potential and the industry would thrive again.
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