Kajaria Ceramics Ltd., an Indian ceramic tile maker backed by billionaire investor Rakesh Jhunjhunwala, may spend as much as 1.5 billion rupees ($33.8 million) on a new unit in the nation’s south to meet demand.
“There is huge demand in the south that we are not able to satisfy,” Finance Director Sanjeev Agarwal said in a telephone interview. “Our cash flow is sufficient to take care of the expansion.”
India’s expanding economy, which has grown an average 8.5 percent per annum for the past five years, is stoking demand for building materials used in homes, shopping complexes and offices. A 52 percent surge in Kajaria’s share price this year compares with a 20 percent advance in the benchmark Bombay Stock Exchange Sensitive Index.
The shares rose 1 percent to 79.55 rupees as of 10:48 a.m. local time in Mumbai, while the benchmark stock gauge fell 0.1 percent.
Net income will rise 53 percent from a year earlier to 550 million rupees in the 12 months through March, Agarwal forecasts, while sales will reach 10.5 billion rupees, a 43 percent increase.
Output at an existing plant in north-western India’s Rajasthan state will increase by fourfold in January as a new product line commences, Agarwal said. The unit in southern India may be built in the year beginning April 2012, he said.
Jhunjhunwala, named by Forbes magazine as the Warren Buffett of India, owns about 3.4 percent of Kajaria, according to data compiled by Bloomberg.
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