NEW DELHI: Dalmia Cement has entered into a binding agreement to acquire the clinker, cement and power plants of debt-laden Jaiprakash Associates Limited (JAL) and its associate at an enterprise value of Rs 5,666 crore.
JAL and its associate have a cement capacity of 9.4 million tonnes (MT), along with a clinker capacity of 6.7 MT and thermal power plants of 280MW. These assets are situated in Madhya Pradesh, Uttar Pradesh & Chhattisgarh. The transaction is subject to due diligence, and requisite approvals from lenders/JV partners of JAL and regulatory authorities.
This development comes amid growing consolidation in the cement sector with the entry of the Adani Group earlier this year. In October 2022, the port-to-power conglomerate was rumoured to be acquiring JAL’s assets, which now is picked by Dalmia.
The fresh acquisition will enable Dalmia to expand its footprint in central India and emerge as a pan-India cement company with a capacity of 75 MT by FY27 and 110 - 130 MT by FY31, the cement maker said in a statement.
For JAL, whose total debt reportedly has spiralled to nearly Rs 29,000 crore, the deal is likely to prevent lead banker SBI to drag the company to the National Company Law Tribunal (NCLT). Manoj Gaur, Executive Chairman of JAL, said, “In order to repay the loans of lenders and concentrate in its other core areas of working, JAL has decided to divest from the cement business completely.”
JAL, for years now, has been taking steps to reduce its debt and repay lenders. In this regard, it had divested more than 20 MTPA cement capacity in favour of leading player UltraTech Cement between 2014 and 2017. This is also the second time when JAP has inked a deal with Dalmia Group as it had sold a controlling stake of more than 2 MTPA cement capacity to the latter in 2015.