JK Cement plans UAE plant

India-based cement manufacturer JK Cement has announced an investment of Rs750 crore (Dh55m) to set up a white cement plant in the UAE, through a subsidiary, with capacity to produce 0.6 million tonnes per year (mtpy).

This is in sharp contrast to the earlier announced plans for a 2.2 mtpy, $400mn project. The UAE cement plant by Kanpur-based cement maker JK Cement was scheduled to go on stream by the middle of 2010, but was hit by deteriorating economic conditions amid global slump and meltdown.

The new plant will be set up at the Fujairah Free Trade Zone and, according to JK Cement’s filing to Bombay Stock Exchange (where the form is listed), the plant will have provision to change over to produce grey cement.

“JK Cement has informed BSE that the Board of Directors of the Company at its meeting held on November 11, 2011, inter alia, has approved setting up of cement plant at J. K. Cement Works (Fujairah) FZC with production capacity of 0.6 Million Ton per annum of White Cement with a provision to change over to 1.01 Million Ton per annum capacity, grey cement at a total cost outlay $150 million. The project will be funded at a debt equity ratio of 2:1,” the filing said.

Fujairah Investment, an undertaking of the Fujairah government, will have a 10 per cent stake in the greenfield plant, that is being set up by JK Cement’s local subsidiary JK Cement Works (Fujairah).

The plant, which was earlier planned with a debt-equity ratio of 1:2, reportedly ran into financial troubles during the global economic slowdown, which has seen cement demand dwindle in the Gulf countries. A.K. Saraogi, chief financial officer, JK Cement, said in 2008 that bankers weren’t ready to fund the project and it wasn’t a good time to go ahead with high interest rates.

“We have to revisit the strategy and rework the whole project cost of the proposed UAE unit. We initially had estimated the project to go on stream by the middle of 2010, he had then said.

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