JK Lakshmi to acquire Egyptian co for Rs 800 cr

MUMBAI: As part of its strategy to tap overseas markets, JK Lakshmi Cement, the Hari Shankar Singhania Group flagship, is holding talks to acquire an Egyptian cement firm for around Rs 800 crore. A person privy to the development said that the target company has an annual production capacity of two million tonne and the deal is likely to be sealed by the end of this calendar year. He, however, declined to disclose the identity of the overseas firm. The target was identified after a technical team from JK Lakshmi visited Egypt and the Middle East, he said. (Watch)

“We are looking at inorganic growth opportunities in the overseas market but nothing has been finalised,” said whole-time director Shailendra Chouksey.

Delhi-based JK Lakshmi, which has a cash reserve of Rs 450 crore, had announced plans to raise Rs 700 crore later this year. A person close to the company said that if the Egyptian-buy materialised, it will be financed by the proposed fund-raising and cash reserves.

The Egyptian acquisition, if fructifies, will help JK Lakshmi tap the growing Middle East market. The cement sector in Egypt was privatised a decade ago, when a number of investors from Italy and Palestine, bought major state-owned companies. “The Egyptian market appeals to foreign cement investors by offering labour and energy at cheap rates,”
said Rupesh Sankhe, analyst at Angel Securities.

Back home, JK Lakshmi plans to expand its cement capacity to 8 MT in the next five years from the current 3.65 MT. It sells cement in western (65%) and northern (35%) states with a dominant presence in Gujarat and Rajasthan.

Its net profit rose to Rs 241 crore for the year ended March 31, 2010, from Rs 178 crore a year ago and total income jumped to Rs 1,490 crore from Rs 1,225 crore in the same time period.