Strong Foundations

We have seen that quite often de-mergers tell the rags to riches story. The same holds true for the company we analyse here. In November 2004, after having incurred heavy losses and net worth erosion, JK Synthetics Limited decided to de-merge its two main business areas. The company was involved in the manufacturing of man-made fibres and cement. Its cement division was de-merged to form a new company - JK Cement, which is today one of the leading grey cement manufacturers of northern India. JK Cement has two state-of-the-art operational plants in Rajasthan - in Nimbahera with three kilns and 2.8 million tonnes per annum (mtpa) capacity and in Mangrol with a capacity of 0.75 mtpa. The company recently underwent capacity expansion, increasing its grey cement manufacturing capacity by 0.5 mtpa, taking the installed capacity to a total of 4.05 mtpa. JK Cement holds an important position in the white cement segment as well. It is the second largest white cement manufacturer in the country with an installed capacity of 0.3 mtpa, after having been expanded recently by 0.5 lakh tpa. All of JK Cement's plants are located close to its mining reserves, which are estimated to have a lifespan of 40 years. The company boasts of a strong and dedicated marketing network as well. Investment Rationale Focussed Cement Player JK Cement acquired the cement business of JK Synthetics following the de-merger and focused concentration on the cement business has enabled the company to grow from being a 'going concern' to a major player of the segment. The company reco

This article was originally published on September 30, 2008.