<article><a href="http://www.ultratechcement.com/" target="_blank">UltraTech Cement</a> Ltd on Sunday said it has agreed to buy <a style="color: #000080;" href="http://www.jalindia.com/" target="_blank">Jaiprakash Associates</a> Ltd’s cement plants in six states at an enterprise value of Rs.16,500 crore.</article>

<a href="http://www.ultratechcement.com/" target="_blank">UltraTech Cement</a> Ltd on Sunday said it has agreed to buy <a style="color: #000080;" href="http://www.jalindia.com/" target="_blank">Jaiprakash Associates</a> Ltd’s cement plants in six states at an enterprise value of Rs.16,500 crore.
Jaiprakash Associates has a total capacity of 22.4 million tonnes per annum in the states of Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Andhra Pradesh and Karnataka. The agreement includes a 4 mtpa plant under implementation at a cost of Rs.470 crore.
The assets will give UltraTech access to the newer markets of Satna, Uttar Pradesh East, Himachal Pradesh and coastal Andhra where it does not have a presence, the Aditya Birla Group controlled company said in a statement.
Once the transaction is completed, UltraTech’s cement capacity will rise to 90.7 mtpa from the current 68.3 mtpa, the company said, adding the two parties have agreed to an enterprise value of Rs.16,500 crore for Jaiprakash Associates’ cement assets.
“The deal does not seem to be too cheap. The total capacity being sold includes some in Andhra Pradesh which will never fetch any reasonable valuation,” said a senior cement analyst with a foreign brokerage firm who did not wish to be identified.
The transaction is subject to definitive agreements and regulatory approvals as may be required.
Sunday’s announcement comes just two days after UltraTech called off a deal with Jaiprakash Associates to buy its cement assets in Madhya Pradesh, citing regulatory issues. UltraTrech had entered into an scheme of arrangement with Jaiprakash Associates for its Madhya Pradesh assets in December 2014 and called it off on Friday. The larger deal for which UltraTech has entered into an accord on Sunday includes assets in Madhya Pradesh. However, the company did not disclose specific plant details.
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“On a proactive basis, we had taken concrete steps to divest two cement plants in Madhya Pradesh in January 2015, but for reasons not attributable to the company, this divestment could not take place which is a matter of great concern, as this affects even groups like us which are proactively pursuing the process of deleveraging through disinvestment,” Manoj Gaur, executive chairman, Jaiprakash Associates Ltd said.
“In the given situation, it has now been considered appropriate to divest a significant portion of the total cement capacity in favour of a company which is not only India’s largest cement player but would also be the first cement company in India to achieve the coveted 100 million tonne mark in the cement segment,” Gaur said.
Lenders to Jaypee Group have been pushing for the sale of its cement assets in a bid to reduce the group’s overall debt. The group had an estimated debt of Rs.75,000 crore at the end of the 31 March 2015, according to the 21 October edition of Credit Suisse’s House or Debt report.
Jaypee Group has already sold two hydropower projects in Himachal Pradesh; cements assets in Gujarat, Jharkhand and Haryana; and wind power assets in Gujarat and Maharashtra in the past two years.
Gaur said that Jaypee Group is determined to leverage its expertise in the fields of engineering, construction, real estate and project execution in a committed manner and such steps would further cement its credentials of being a trustworthy organization in the long run.
Jaypee Group said though it has taken steps to effectively address debt reduction, the group would be dependent on the regulatory framework, including the proposed amendments in the Mines and Minerals (Development and Regulation) Act (MMDRA) for the different options available to it for consummating the proposed transaction expeditiously.
The group was referring to the conditions that a cement deal cannot be completed before a proposed amendment to the MMDRA is cleared.
Existing rules do not allow a company to transfer rights to an allotted mine to another company or subsidiary.
Given that limestone is a key raw material in the cement-making process, it is difficult to execute the sale of cement capacity without selling the related limestone mines as part of the deal.
In addition, the UltraTech Cement-Jaiprakash Associates deal may also run into anti-trust issues as the acquisition will expand UltraTech’s presence in the northern and central India markets.
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<h4>This story was first published on <a href="http://livemint.com/">Livemint</a></h4>

UltraTech Cement Ltd on Sunday said it has agreed to buy Jaiprakash Associates Ltd’s cement plants in six states at an enterprise value of Rs.16,500 crore.

India: Ultratech to buy Jaiprakash Associates’ cement assets for $2.4b

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