Bombay High Court rejects UltraTech Cement’s plan to buy JP Associates’ plants in MP>

Industry:    February, 2016

Fifteen months after India’s largest cement company by capacity UltraTech Cement had agreed to buy JP Associates’ two cement assets in Madhya Pradesh, the Bombay High Court has rejected the scheme of arrangement for the acquisition, citing the new MMDR Act as the prime reason. However, UltraTech has now emerged as a strong contender to buy 22 million tonnes of cement assets that Jaypee is trying to sell. These two MP plants are part of that package. Under the new Mines and Mineral Development and Regulation (MMDR) 2015 Act, mine reserves which are not bought through auction, cannot be transferred to a seller. ET had reported on February 23 this year that the exclusive discussions between UltraTech and Jaypee for the sale of Jaypee’s MP cement assets were set to be terminated. To deal with the mining transfer logjam, JP Associates has clubbed the two cement plants in Madhya Pradesh into a bigger 22 MT cement package and then sell the the shares of Jaiprakash Associates, the company that owns the mines and the cement plants. In December 2014, under a scheme of arrangement between UltraTech Cement and Jaiprakash Associates, UltraTech had agreed to buy the latter’s cement plants at Bela and Sidhi in Madhya Pradesh. Besides the 2.1 MT clinker capacity and 2.6 MT grinding capacity at Bela, the deal included 3.1 MT and 2.3 MT clinker and grinding capacity at Sidhi. It also included a power plant with a capacity of 180 MW, of which 25 MW is situated at Bela and 155 MW at Sidhi. This acquisition was valued at Rs 5,400 crore for EV per tonne of $140. It would have enhanced Ultra-Tech Cement’s capacity by 5 MT. At present, UltraTech has a cement capacity of 67.7 MT.