Jaiprakash Associates Ltd (JAL) and its group firms on Monday announced the sale of remaining cement assets to Dalmia Bharat Ltd at an enterprise value of Rs 5,666 crore and exit from the sector as part of its strategy to reduce debt.
According to the deal, Dalmia Bharat Ltd will purchase 9.4 million tonnes of cement capacity along with a thermal plant from Jaypee Group flagship firm JAL and its associate company across several states.
The move would help Dalmia Bharat Ltd increase its manufacturing capacity to 45.3 million tonnes per annum (MTPA) from the existing 35.9 MTPA, enabling it to expand its presence in central India, as the company strives to become a pan-India player.
In a regulatory filing, Dalmia Bharat informed that its wholly-owned subsidiary Dalmia Cement Bharat Ltd (DCBL) has entered into a “binding framework agreement for the acquisition of clinker, cement and power plants from Jaiprakash Associates Ltd and its associate company”.
The deal includes a total cement capacity of 9.4 MTPA, along with clinker capacity of 6.7 MTPA and thermal power plants of 280 MW at an enterprise value of Rs 5,666 crore, it added.
The acquisition will help Dalmia to expand its footprint into the central region, it added. JAL’s assets are situated in Madhya Pradesh, Uttar Pradesh and Chhattisgarh.
Besides, it will also “represent a significant step towards realisation of its vision to emerge as a pan-India cement company with a capacity of 75 MTPA by FY27 and 110-130 MTPA by FY31,” it added.
Dalmia is presently the fourth largest cement manufacturer in India after UltraTech, Adani Cement (which recently entered into the segment by acquiring ACC and Ambuja Cements) and Shree Cement.
JAL had an aggregate capacity of around 6 MTPA and Jaiprakash Power Ventures Ltd (JPVL) has around 4 MTPA.
Separately, Jaypee group firms JAL and JVPL also informed the exchanges about this deal with Dalmia Bharat.
JAL said the disinvestment of cement business is “in line with the continuing endeavour of Jaypee Group’s resolve to reduce its debt”.
Earlier, as part of its debt resolution exercise, JAL had sold more than 20 MTPA cement capacity in favour of Aditya Birla group firm UltraTech Cement between 2014 and 2017.
In 2015, Jaypee group had sold its controlling stake of more than 2 MTPA cement capacity to Dalmia Group.
Commenting over the development, JAL’s Executive Chairman Manoj Gaur said the company has been taking steps to reduce its debt and repay to lenders and meet its commitments on proactive basis.
“In order to repay the loans of lenders and concentrate in its other core areas of working, JAL has decided to divest from cement business completely with the sale of cement capacity of 9.4 MTPA in favour of Dalmia Cement (Bharat) ltd,” he said.
Gaur added that JAL will further cement its credentials of being a trustworthy organisation in infrastructure segment of the country in times to come.
The transaction is subject to due diligence, requisite approvals from lenders/JV partner of Jaiprakash Associates Limited and regulatory authorities, it added.
In a regulatory filing, Jaiprakash Power Ventures said that it will divest 2 MTPA Jaypee Nigrie Cement Grinding Unit to Dalmia Cement (Bharat) Ltd for a consideration of Rs 250 crore.
In October, Jaiprakash Associates and Jaiprakash Power Ventures had announced plans to divest their cement business as well as some non-core assets to reduce debt.
In September 2018, ICICI Bank filed an insolvency petition against JAL but the matter is still pending before the Allahabad bench of the National Company Law Tribunal (NCLT). The country’s biggest lender SBI had in September this year moved to NCLT against JAL, claiming a total default of Rs 6,893.15 crore as on September 15, 2022.
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