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HomeMarketStocksJaypee Group exits cement, sells biz to Dalmia Bharat

Jaypee Group exits cement, sells biz to Dalmia Bharat


Mumbai: Dalmia Bharat on Monday mentioned it’s buying the cement and energy vegetation of money strapped (JAL) for an enterprise worth of ₹5,666 crore, marking an finish to months of hypothesis over potential suitors for the property.

The property put collectively have a cement manufacturing capability of 9.4 million tonnes each year (MTPA), together with clinker capability of 6.7 million tonnes and thermal power plants of 280 megawatts and are located in Madhya Pradesh, Uttar Pradesh, and Chhattisgarh.

An entirely-owned subsidiary of Dalmia Bharat, Dalmia Cement, has entered right into a binding framework settlement to accumulate the cement, clinker and energy vegetation of Jaiprakash Associates (JAL) for an mixture enterprise worth of Rs 5,666 crore, the corporate knowledgeable the exchanges on Monday.

Arpwood was the adviser to the transaction.

The brand new vegetation will take the cement manufacturing capability of Dalmia Cement to 46.3 million tonnes each year (MTPA) from the current 35.9 MTPA, as per its web site. This can take the cement maker nearer to its goal of attaining 75 MTPA capability by FY27 and upwards of 110 MTPA by FY31.

It should additionally put the fourth-largest cement maker in India near third-placed

when it comes to manufacturing capability. and the Adani Group – which lately acquired and – are the main cement makers in India.

Debt-laden Jaiprakash Associates had mentioned in a regulatory submitting earlier this 12 months that it will be divesting its cement property. Earlier, media studies claimed the Adani Group because the frontrunner for buying these property.

“To be able to repay the loans of lenders and focus in its different core areas of working, JAL has determined to divest from the cement enterprise utterly. With the sale of cement capability of 9.4 mtpa … JAL will additional ‘cement’ its credentials of being a reliable group within the infrastructure section of the nation in instances to return,” Manoj Gaur, govt chairman, JAL, mentioned as a part of the deal announcement.

The group flagship had within the final decade been taking steps to scale back its debt and repay to lenders and meet its commitments. It had divested over 20 mtpa cement capability to

Cement throughout 2014 and 2017, whereas promoting its controlling stake of greater than 2 mtpa capability to Dalmia Group in 2015. In line with Jaypee Group, the current transaction with Dalmia Group but once more demonstrates the standard of its property. Again in October, JAL and had introduced plans to divest their cement enterprise in addition to some non-core property to scale back debt.

For Dalmia Cement, the acquisition will develop its footprint within the central area, furthering its goal of being a pan-India participant. The inventory of

climbed 3.3% to Rs 1,905.7 on BSE on Monday in comparison with a flattish Sensex.

The transaction is yet one more main consolidation in India’s extremely fragmented cement sector. The acquisition of ACC and Ambuja Cements by the Adani Group earlier this 12 months and Gautam Adani’s subsequent announcement of aggressive growth plans jolted the cement trade into motion. Incumbent main gamers have adopted swimsuit and introduced equally aggressive growth plans.

Specialists have mentioned that the capability growth by massive cement makers will affect the smaller gamers, resulting in additional consolidation within the sector.

Massive cement makers like UltraTech, Adani Group, Shree Cement and Dalmia Cement have higher bargaining energy given their scale, which helps them obtain decrease value of manufacturing in comparison with their smaller rivals. Additionally they are inclined to have higher distribution channels, which helps them enhance their market share and capability utilisation, consultants mentioned. They imagine {that a} speedy growth in manufacturing capability by massive cement makers will additional tip the scales of their favour.

After Adani’s entry into cement, UltraTech authorised a brand new capex plan of Rs 12,886 crore to extend capability by 22.6 million tonnes each year (mtpa) by means of brownfield and greenfield tasks. This is able to entail establishing built-in and grinding models in addition to bulk terminals throughout the nation, the corporate mentioned, in June, with business manufacturing from these models happening stream in a phased method by monetary 12 months 2024-25 (FY25).



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