UltraTech Cement Ltd, an Aditya Birla Group company, has announced its decision to acquire Madhya Pradesh-based cement assets of Jaiprakash Associates Ltd. (JAL) for an enterprise value of Rs.5,400 crore.
The board of UltraTech Cement on Tuesday approved the acquisition of an integrated cement plant with clinker capacity of 2.1 million tonnes per annum (mtpa) and cement grinding capacity of 2.6 mpta at Bela, an integrated cement plant with clinker capacity of 3.1 mtpa and cement grinding capacity of 2.3 mtpa at Sidhi and a 180 MW thermal power plant (TPP), of which 25 MW is situated at Bela and 155 MW at Sidhi, all located in Madhya Pradesh.
“This acquisition will create significant synergies, and the surplus clinker will enable UltraTech to augment its cement capacity by a further 1.8- 2.5 mtpa in addition to 4.9 mtpa mentioned above. This acquisition will enable the company to increase its presence in Satna cluster of M.P.,” UltraTech Cement said in a statement. The transaction is subject to customary due diligence, definitive agreements, and regulatory approvals as may be required. With this acquisition, UltraTech’s cement capacity in India will increase from 60 mtpa to 65 mtpa and with projects underway, the capacity will stand raised to 71 mtpa by 2016.
PTI reports:
Debt-ridden Jaiprakash Associates, which would still have 22 mtpa capacity after this sale, has been selling cement and power assets to pare debt and improve its balance sheet, it said in a separate release.
“With this disinvestment, the group has disinvested assets of over Rs.20,000 crore, displaying the intent of the group’s founder of maintaining credibility with all its stakeholders including lenders, creditors and shareholders,” said Manoj Gaur, Executive Chairman, Jaiprakash Associates.
With this, JAL’s major disinvestment plans get rested, and the focus will now shift to innovate operational efficiencies to match with the best in class, coinciding with the imminent revival of the Indian economy, the company said.
