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JK Lakshmi Cement

JK Lakshmi cement is a strong player in North India with a dominant position in Rajasthan. Other states where the company has a presence include Haryana, Delhi, Punjab and Uttarakhand in north. In the west also, the company has a healthy presence in Gujarat and has made inroads in the Mumbai markets as well. Sales wise, Gujarat contributes highest at ~35% of sales while Rajasthan contributes 27%. The contribution from the rest of the north region is at ~31%. Maharashtra contributes ~7% to topline.


Integrated cement plant at Durg started commercial production in FY2016 and has reached almost full capacity utilization in less than a year.1.35 MTPA grinding unit at Surat has been commissioned at the end of FY16 and is in the stabilization phase Total capacity across locations is 13 MTPAThe company plans to deleverage its balance sheet before progressing on brown field expansionsTied up with Snapdeal and is the first company in India to foray into online sellingCo had a capacity utilization of 82% as against an industry average of 66%The co continues to be one of the lowest cost producersThe Durg Plant has performed satisfactorily in the very first full year of its operations and achieved 104% capacity utilization in the last quarter of FY 2015-16. Company has become a third largest player in Chhattisgarh market in a short span of time.


Durg plant: In the quarter, sales from the East plant was 0.5mt against 0.19mt in Q1FY16. EBITDA has turned positive for the plant in the quarter primarily led by cost reduction as realization remains weak. The company is buying power for the plant at Rs6.8/unit from the grid which is very expensive (CPP generat ion cost is Rs4/unit). In order to save energy costs, it is in process of commissioning WHRS of 7MW (to be operational by Sep - 17). However, it will be able to cater to only 30% of the power requirement of the unit. Hence, the company is also trying to source power from private source which will be relatively lower than the grid cost (but not as low as the CPP cost). This is expected result in cost savings of Rs150/tn. Also, construction of railway siding is under progress and is expected to be com missioned by the FY18 - end which may further lead to savings Rs300 - 350/tn. Through these initiatives, saving of at least Rs300 - 400/tn is expected in the opex of East plant.

Product and sales mix of East plant :
East plant is currently producing 75% PPC and 25% OPC+PSC. This plant is currently selling 60% in Chhattisgarh , 20 - 25% in Orissa and rest in other markets. Larger exposure to Chhattisgarh market has led to lower realization for this unit . Thus company’s focus is more on cost saving so that the profitability can be improved.

Capex update:
The coompany has planned capex for a) Rs150cr for the capacity expansion at Durg plant from 1.8mt to 2.7mt (expected to get commissioned by Jun - 17), b) Rs90cr for WHRS unit of 7MW (to be operational by Sep - 17, c) Rs 100cr for the grinding unit at Orissa (0.6mt), to be operational by Sep - 17, d) Rs150cr for railway siding at the Durg plant (expected to get commissioned by FY18 - end ) and e) Rs20-22 cr left capex for Surat plant (trial run has started). Additionally , remaining capex for Udaipur plant (1.6mt, expected to get commissioned by Dec - 16) is Rs200cr.

Sales mix:
Company sells 60% in Chhattisgarh and 20 - 25% in Orissa form the East plant. From North plant it caters to Gujarat (35%), Rajasthan (30%), Maharashtr a (5%) and rest to other parts of north region.

Clinker production:
The company produced 0.34mt clinker in Q1FY17 as compared to 0.20mt/0.3mt for Q1FY16/Q4FY16.

Lead distance:
Lead distance for North /East plants is 450kms /300kms . The company is planning to take initiatives to reduce the freight cost in the North region.

The average petcoke cost for the company in Q1FY16 was Rs5000/tn, however it has increased to Rs6,500 - 6,600/tn (spot price) as of now . It uses 90 - 95% petcoke.

Debt and cash level:
As of 30 th June, 2016 , gross debt of the company stood at Rs1950cr and cash was at Rs450cr. Debt pertaining to the Udaipur Cement stands at Rs500cr. Cash level has increased from Rs250cr as of Mar’16 to Rs450cr as of Jun’16.

Growth outlook:
As per the management the North/Gujarat/East regions grew by 1.0%/2.5%/3.0% in Q1FY17. On account of monsoon season, the company is not expecting any revival in the demand in Q2FY17, however, going forward it remains positive on the demand outlook for 2HFY17 and expects demand growth of 7 - 8% growth in this period . This, as per management, is expected to be driven by government spending on infrastructure, smart cities, housing for all scheme and rural growth on the backdrop of good monsoon.

DISCLOSURE: I am invested in the company.


Sir, you’ve not mentioned any negative points about the company.

Standard risks for a commodity company apply here as well. It is dependent on the input material and power costs. Also, being a pure commodity it is a price taker and cannot determine price. It has high debt. Its East plant does not make much money as of now and needs to have better utilization and cost rationalization.


@basumallick Dada,commodity business with no pricing power and high debt are 3 big strikes to not own a business.Curious to know,what enticed you to own it?

Inspite of all the negative, which are right also I think the reason behind buying this its undervaluation compared to peers. And I think with the bull market just started with ample liquidity, infra and related stocks may go up.

Correct me if anything is wrong.

Can we compare Mangalam Cement with JK Lakshmi?

I have played the cement theme multiple times in the past, so one reason to buy JKLC is familiarity. JKLC has got capacity in place and the West & North are seeing good price realizations. Plus with a large number of infra & highway projects getting kickstarted, I think, the cement sector is just beginning to get started. Although the prices have gone up and may consolidate at these levels till the despatches start picking up post monsoon.

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Cement is one of those commodities which you must not hesitate to play even if you are cyclical averse.

The variables are limited—price, capacity, locational advantage. Small players have their own playing field ( aka prism cement, deccan etc.)

Earnings growth is not too difficult to identify.Govt intervention comes at later stage hen cartelization becomes evident.

Unlike the real estate sector ( which too has become somewhat cyclical) , transparency is not so much an issue in cement. You will never know if land bank is genuine or not . In cement, when sector moves almost everyone gets benefit and chances of " trap" are less.


Please see article from India Cement review- mentions JK Lakshmi cement and OCL India as 2 companie showing y-o-y revenue growth

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Looking More incoming infra projects in North India, may be boom in Cement Industries. booster to the cement industries marketing in Same area.

CCI imposes Rs 6,700 crore fine on 10 cement companies, including ACC, Ultratech and Lafarge for cartelization

JK Lakshmi Cement is not one of those fine. It is JK Cement.

Q2 results

  • the cos split location grinding unit at Surat has been commissioned to enhance capacity from 8.65MT to 10 MT

Q3 FY17 Results - Good results keeping in mind demand crunch due to demonetization

FY 17 and Q4 Concall Updates:

  • Total sales volume rose 6% YoY to 2.29mn MT. Clinker sales accounted for 13% of total sales volume vs 9% YoY and 10% QoQ. In FY17, total sales volume rose 9% YoY to 8mn MT.
  • Sales from the north plant rose 3% YoY (+25% QoQ) in Q4FY17 and 1% YoY in FY17. Clinker plant operated at 98% utilisation in the north in FY17 and at 104% in Q4FY17.
  • Sales from the east plant rose 17% YoY (+28% QoQ) in Q4FY17 and rose 48% YoY in FY17 driven by production ramp-up. Clinker plant operated at 91%/76% utilisation during Q4FY17/FY17. Buoyed by price improvement in the east and higher utilisation, the east plant delivered positive EBITDA in Q4, though not enough to cover capital charges.
  • JKLC’s sales mix stands as follows. In the north – 50% trade, 50% non-trade. In the east: 80% trade, 20% non-trade. In the north, JKLC sells ~54% PPC and 46% OPC. In the eastern region, it sold about 25% OPC, 65% PPC and ~10% slag cement.
  • JKLC’s landed petcoke prices in Q4FY17 rose 7% QoQ to Rs6,000/MT. Petcoke prices have further increased in Q1FY18 by 5% to Rs6,300/MT.
  • JKLC completed its Durg grinding capacity expansion by 0.9mnMT to 2.7mn MT in March 2017. The company guided that it is working to complete the Cuttack grinding unit in Odisha (0.6mn MT) by FY19. This would entail Rs60cr capex outgo in FY18 and another ~Rs50-60cr in FY19.
  • To reduce operating cost at Durg, the company is adding a 7MW WHRS in Durg (expected by Sep-Oct 2017), entailing capex of Rs90cr. Further, JKLC is also planning to set up a 20MW CPP in Durg by Oct’2018 (capex Rs1300mn). The conveyor belt commissioning at durg plant is delayed by six months to Sep-Oct 2017. Maintenance capex of ~Rs50cr each to be spent during FY18/19E.
  • Management cited that it will focus on commissioning the ongoing projects in the east over the next 12-18 months. Thereafter it will work towards its brownfield capacity expansion across its plant locations in Rajasthan and Chhattisgarh to increase capacity to 20 mnMT over the next three to five years.
  • Standalone gross and net debt currently stands at ~Rs2200cr/Rs1700cr in FY17 vs Rs1900/1700cr YoY.
  • The subsidiary – Udaipur Works commissioned its 1.25mn MT clinker capacity and also completed grinding expansion by 1mn MT to 1.6mn MT by Mar’2017. The subsidiary is now working on setting up a 3MW of WHRS here. JKLC has also planned to relocate its 18MW of surplus CPP from Sirohi to Udaipur (relocation cost of ~Rs500mn) to make Udaipur Works self-sufficient in terms of power.
  • The gross debt on Udaipur Works’ book is ~Rs5bn in FY17.
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CRISIL seminar on cement sector_13Jun17.pdf (1.5 MB)
Attaching the presentation of CRISIL on cement sector used in the webinar today. Hope this helps.

Q1FY18 Results

Hello,are you still tracking this company?If so,what is your current reading of it?
Its subsidiary udaipur cement has better operating margins and is catering exclusively in the north which has favourable capacity utlisation.So wouldnt it be a good idea owning the subsidiary directly ?

JK lakshmi cement

Highlights from the management commentary

  • Cement demand has declined by 30% MoM in Apr’21 and by a further 5% MoM in May’21. The management expects demand to recover by Jun’21.

  • The company has exhausted its low-cost fuel inventory. 1QFY22 will witness the full impact of higher fuel prices. The incentive of INR40-50/t to UCWL for volumes sold in Rajasthan has expired in Mar’21.

  • FY22 capex guidance stands at INR1.4b for JKLC (including INR1b for the Sirohi WHRS project), while another INR2b will be spent on the announced capacity expansion at UCWL.

  • Debottlenecking of clinker capacity to 1.5mt (from 1.2mt) and cement to 2.2mt (from 1.6mt) at UCWL is expected to be completed in Jun’21.

  • Standalone gross/net debt stands at INR11.3b/INR4b, while consolidated gross/net debt stands at INR16.5b/INR8.2b.