This story first appeared in DNA Money edition on Tuesday, April 16, 2013.
A delay of 2-3 months appears inevitable in the launch of JK Lakshmi
Cement’s (JKLC) greenfield project at Durg, Chhattisgarh, following
violent disruption of project work by irate local villagers seeking
employment for all of them earlier this month.
It is learnt only around five locals lost their land due to the project getting located at Durg. Now, the plant may be commissioned by the first quarter of next fiscal,
said a Karvy Stock Broking report written after a meeting with top JKLC
The Durg project is expected to expand JKLC’s clinker capacity by 1.8
million metric tonne (mmt) and grinding capacity by 2.7 mmt. JKLC
officials could not be reached for a comment.
The Karvy report said JKLC management expects damage caused to the new
plant to be around Rs 150 crore. A precise figure will be arrived at
over the next few days when equipment manufacturers and surveyors
ascertain the actual damage.
There is low probability that such protests may recur, the management said in an analyst guidance.
Rajesh Kumar Ravi, research analyst at Karvy, said such agitations are
mostly politically motivated and are part of business risks associated
with large greenfield capital expenditure (capex).
“We do not expect any negative impact in our sales volume assumption
for FY15E as we have already modelled this capacity to be effective in
the second quarter of fiscal 2015 (2QFY15). With the financial damage
covered under insurance, the expected loss of up to Rs 150 crore should
not impact its near-term cash flow,” said Ravi.
A Religare Institutional Research note last week said JKLC had
estimated an initial loss of Rs 250-300 crore when it first filed the
first information report with the police. But this was revised down to
Rs 120-150 crore on further examination. The insurance company will take
around ten days to determine the actual loss.
Follow Ashish K Tiwari on twitter @ashishktiwari