Adani to acquire Jaypee cement assets of over 9 mtpa
ECONOMY & POLICY

Adani to acquire Jaypee cement assets of over 9 mtpa

The Adani Group, India's second-largest cement maker with ACC and Ambuja Cement under its umbrella, is strategising to acquire Jaypee Group's cement assets totaling over 9 million tonnes per annum (mtpa). This development follows the initiation of insolvency and bankruptcy proceedings against Jaiprakash Associates in early June.

On June 3, the National Company Law Tribunal (NCLT) in Allahabad admitted Jaiprakash Associates Ltd for corporate insolvency; almost six years after ICICI Bank filed the application. Sources familiar with the situation told the source that this has created an opportunity for Adani to acquire Jaiprakash's cement and associated assets, including limestone mines and a power plant.

However, these are still early stages in the bankruptcy proceedings, with Jaiprakash being admitted to the NCLT just last month and its committee of creditors having met only once so far, on June 29. No formal sale process for Jaiprakash Associates' assets has been initiated yet.

The insolvency proceedings are expected to intensify competition in the rapidly consolidating cement industry, where major players like UltraTech, Adani, Dalmia, and JSW Cement are vying for assets nationwide.

On June 27, UltraTech purchased a 19.44% stake in India Cements at Rs 267 per share, with plans to acquire an additional 3.4% at up to Rs 285 per share, bringing the total acquisition cost to just over Rs 19 billion. This move is seen as a preemptive measure to fend off competition.

In 2022, Dalmia Bharat had signed a deal with Jaypee to acquire its cement and power assets for an enterprise value of Rs 56.66 billion. However, Dalmia has not been able to close the deal due to pending approvals from Jaiprakash Associates' lenders. An ongoing arbitration between Jaiprakash and UltraTech Cement over the JP Super Dalla asset has also delayed the process.

Dalmia?s proposed acquisition includes 2.2 million tonnes of cement capacity at Bhilai, 3.3 million tonnes of clinker at Babupur, and JP Super in Uttar Pradesh. The acquisition of the 2 mtpa cement plant at Nigrie in Madhya Pradesh involves a seven-year lease agreement with an option to purchase within the lease period. The JP Super asset's acquisition is contingent on the arbitration outcome between Jaiprakash and UltraTech.

UltraTech has expressed its intention to take over Jaiprakash Associates? Dalla Super (formerly JP Super) cement asset in Uttar Pradesh post-arbitration.

Ambuja Cements, part of the Adani Group, recently announced its acquisition of Hyderabad-based Penna Cement Industries Ltd for an enterprise value of Rs 104.22 billion. This will add 14 mtpa to Adani?s cement capacity, bringing the total to 89 mtpa.

In December 2023, Adani acquired a controlling stake in Sanghi Industries for Rs 51.85 billion, adding 6.1 mtpa to its portfolio.

Emails sent to Adani Group, UltraTech Cement, and Dalmia Bharat for comments did not elicit a response. (Source:Moneycontrol)

The Adani Group, India's second-largest cement maker with ACC and Ambuja Cement under its umbrella, is strategising to acquire Jaypee Group's cement assets totaling over 9 million tonnes per annum (mtpa). This development follows the initiation of insolvency and bankruptcy proceedings against Jaiprakash Associates in early June. On June 3, the National Company Law Tribunal (NCLT) in Allahabad admitted Jaiprakash Associates Ltd for corporate insolvency; almost six years after ICICI Bank filed the application. Sources familiar with the situation told the source that this has created an opportunity for Adani to acquire Jaiprakash's cement and associated assets, including limestone mines and a power plant. However, these are still early stages in the bankruptcy proceedings, with Jaiprakash being admitted to the NCLT just last month and its committee of creditors having met only once so far, on June 29. No formal sale process for Jaiprakash Associates' assets has been initiated yet. The insolvency proceedings are expected to intensify competition in the rapidly consolidating cement industry, where major players like UltraTech, Adani, Dalmia, and JSW Cement are vying for assets nationwide. On June 27, UltraTech purchased a 19.44% stake in India Cements at Rs 267 per share, with plans to acquire an additional 3.4% at up to Rs 285 per share, bringing the total acquisition cost to just over Rs 19 billion. This move is seen as a preemptive measure to fend off competition. In 2022, Dalmia Bharat had signed a deal with Jaypee to acquire its cement and power assets for an enterprise value of Rs 56.66 billion. However, Dalmia has not been able to close the deal due to pending approvals from Jaiprakash Associates' lenders. An ongoing arbitration between Jaiprakash and UltraTech Cement over the JP Super Dalla asset has also delayed the process. Dalmia?s proposed acquisition includes 2.2 million tonnes of cement capacity at Bhilai, 3.3 million tonnes of clinker at Babupur, and JP Super in Uttar Pradesh. The acquisition of the 2 mtpa cement plant at Nigrie in Madhya Pradesh involves a seven-year lease agreement with an option to purchase within the lease period. The JP Super asset's acquisition is contingent on the arbitration outcome between Jaiprakash and UltraTech. UltraTech has expressed its intention to take over Jaiprakash Associates? Dalla Super (formerly JP Super) cement asset in Uttar Pradesh post-arbitration. Ambuja Cements, part of the Adani Group, recently announced its acquisition of Hyderabad-based Penna Cement Industries Ltd for an enterprise value of Rs 104.22 billion. This will add 14 mtpa to Adani?s cement capacity, bringing the total to 89 mtpa. In December 2023, Adani acquired a controlling stake in Sanghi Industries for Rs 51.85 billion, adding 6.1 mtpa to its portfolio. Emails sent to Adani Group, UltraTech Cement, and Dalmia Bharat for comments did not elicit a response. (Source:Moneycontrol)

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