Adani Group in talks to buy Jaiprakash's cement units for Rs 5,000 crore

PTI

New Delhi, October 10

Adani group is in talks to buy the cement businesses of debt-laden Jaypee Group for about Rs 5,000 crore as the conglomerate helmed by the richest Asian consolidates its presence in a sector it entered a few weeks back.

Sources said Adani group is in advanced talks with the management of Jaiprakash Associates and the deal could be announced shortly.

Both Adani group and Jaypee group declined to comment.

The ports-to-energy conglomerate had recently forayed into the cement sector with the acquisition of Ambuja Cements and ACC Ltd to become the nation's second-largest cement maker with annual production capacity of 67.5 million tonnes.

Jaypee group had sold its cement business to UltraTech but a few units were still housed in group firms. The boards of Jaiprakash Associates Ltd and Jaiprakash Power Ventures Ltd on Monday approved plans to divest their cement business as well as some non-core assets to reduce debt.

If the deal goes through, Adani would get nearly 10 million tonnes per annum (MTPA) of capacity from the Jaypee group.

Gautam Adani, chairman and managing director, had last month announced plans to double his group's cement manufacturing capacity to 140 million tonnes per annum by 2030.

UltraTech, the nation's largest cement manufacturer, has a production capacity of 119.95 MTPA and has plans to raise it to 159.25 MPTA.

Jaiprakash Associates Ltd (JAL) presently has an aggregate capacity of around 6 MTPA and Jaiprakash Power Ventures Ltd (JPVL) has around 4 MTPA.

On Monday, JAL and JPVL, both part of the Jaypee group and facing business headwinds, announced plans to divest their cement business as well as some non-core assets to reduce debt.

The companies' decision to sell their cement business also comes against the backdrop of a recent plea by the country's biggest lender SBI to initiate insolvency proceedings against Jaypee group's flagship firm Jaiprakash Associates Ltd (JAL).

"With a view to give thrust to the ongoing efforts of the company to reduce its debt, the board of directors in their meeting... decided to divest company's significant cement business," JAL said in a regulatory filing.

The board of JPVL has also “decided to divest company's Nigrie Cement Grinding Unit as well as other non-core assets,” according to another regulatory filing.

Nigrie Cement Grinding Unit, which is based near Jaypee Nigrie Super Thermal Power Plant at Singrauli in Madhya Pradesh, has a capacity of 4 million tonnes per annum. At present, 2 million tonnes per annum is in operation.

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).  

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