The Jaypee Group on Monday said that a binding agreement had been signed to sell the group’s cement business to Dalmia Cement (Bharat) Ltd at an enterprise value of Rs 5,666 crore.
The binding agreement has been signed by Jaiprakash Associates and Jaiprakash Power Ventures.
The divestment includes cement plants with an aggregate capacity of 9.4 million tonne, clinker assets with a capacity of 6.7 million tonne, and 280 MW capacity thermal power plant, the Jaypee Group companies said in a release.
Proceeds from the divestment of the cement assets to Dalmia Bharat will be primarily used to repay Jaiprakash Associates’ debt.
This is the second asset sale deal clinched by debt-laden Jaiprakash Associates with the Dalmia Group. The company had sold controlling stake in cement units with total capacity of 2 million tonne per annum (MTPA) to the Dalmia Group in 2015. The group has been taking several steps to reduce debt to stave off an insolvency bid by its lenders.
Between 2014 and 2017, Jaiprakash Associates divested cement assets of more than 20 MTPA capacity to UltraTech Cement.
The cement and clinker capacities currently being sold to the Dalmia Group are situated in Madhya Pradesh, Uttar Pradesh, and Chhattisgarh.
According to reports, the Adani Group, which recently acquired Holcim Group’s cement assets in India, was eyeing Jaiprakash Associates’ cement assets and had offered Rs 5,000 crore to acquire the same.
UltraTech Cement had also reportedly evinced interest, but the lack of agreement over valuations saw the cement major dropping off the race.
Dalal Street investors cheered the asset divestment news, as both shares of Jaiprakash Associates and Jaiprakash Power Ventures zoomed 10% each.
Shares of Dalmia Bharat, the parent of Dalmia Cement (Bharat), ended 3% higher at Rs 1,906.30 as the acquisition will further strengthen the company’s position in the key north and central markets.
Source: Economic Times