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Jaiprakash to sell cement, power units to Dalmia Group for Rs 5,666 cr

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is selling its cement, clinker and power plants to Cements at an enterprise valuation of Rs 5,666 crore, the company announced in a statement to the stock exchanges.


The sale will give additional cement capacity of 9.4 million tonnes (mt), along with a clinker capacity of 6.7 mt and capacity amounting to 280 Mw. The plants are situated at Madhya Pradesh, Uttar Pradesh, and Chhattisgarh.


The transaction is subject to due diligence, receipt of requisite statutory clearances and necessary compliances, including approvals from the firm’s lenders, its joint venture partner and regulatory authorities.


Manoj Gaur, Executive Chairman, Jaiprakash Associates, said, “ the company has been taking steps to reduce its debt and repay lenders and meet its commitments on a proactive basis.”


To achieve this end, had divested cement capacity of over 20 million tonnes per annum (MTPA) to UltraTech Cement Ltd between 2014 and 2017, and sold its controlling stake in over two MTPA cement capacity to the Group in 2015.


In order to repay the loans taken from lenders and focus on other core business areas, Jaiprakash Associates has decided to exit the cement business completely. “With the sale of cement capacity of 9.4 MTPA to (Bharat) Ltd, we hope and pray (that after) having demonstrated its creditable working, Jaiprakash Associates will further ‘cement’ its credentials of being a trustworthy organisation in the country’s infrastructure segment in times to come,” Gaur said. “The present transaction with the Dalmia Group yet again demonstrates the quality of assets with the Jaypee Group.”


Analysts said Dalmia is entering the high-growth and new markets of UP and MP (Central region), thereby diversifying from existing markets of South and East.


With this, Dalmia’s domestic market capacity will increase from current 37 mtpa to 48 mtpa and to 60 mtpa by FY24, taking the group ahead of Shree Cement’s domestic market capacity of 56 mtpa by mid-FY25.


But analysts warned that Dalmia may turn into a net debt company from almost debt free now. However, net debt to EBITDA may still remain below 2x. The remaining tenure of limestone mines of acquired assets may be limited, analysts and warned.

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