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    Ultratech and Jaypee Associates Deal

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    Namita Dey
    UltraTech Cement Ltd struck a deal to acquire two cement plants from Jaiprakash Associates Ltd located in Madhya Pradesh for Rs 5,400 crore. The acquisition included plants with clinker production capacity of 2.1 million tonnes per annum (MTPA) and grinding capacity of 2.6 MTPA in Bela, and clinker capacity of 3.1 MTPA and grinding capacity of 2.3 MTPA in Sidhi. The deal helped UltraTech consolidate its position as the largest cement producer in India, while helping Jaiprakash Associates reduce its large debt burden. The Competition Commission of India approved the deal.

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    Ultratech and Jaypee Associates Deal

    Uploaded by

    Namita Dey
    252 views2 pages
    UltraTech Cement Ltd struck a deal to acquire two cement plants from Jaiprakash Associates Ltd located in Madhya Pradesh for Rs 5,400 crore. The acquisition included plants with clinker production capacity of 2.1 million tonnes per annum (MTPA) and grinding capacity of 2.6 MTPA in Bela, and clinker capacity of 3.1 MTPA and grinding capacity of 2.3 MTPA in Sidhi. The deal helped UltraTech consolidate its position as the largest cement producer in India, while helping Jaiprakash Associates reduce its large debt burden. The Competition Commission of India approved the deal.

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    UltraTech Cement Ltd struck a deal to acquire two cement plants from Jaiprakash Associates Ltd located in Madhya Pradesh for Rs 5,400 crore. The acquisition included plants with clinker production capacity of 2.1 million tonnes per annum (MTPA) and grinding capacity of 2.6 MTPA in Bela, and clinker capacity of 3.1 MTPA and grinding capacity of 2.3 MTPA in Sidhi. The deal helped UltraTech consolidate its position as the largest cement producer in India, while helping Jaiprakash Associates reduce its large debt burden. The Competition Commission of India approved the deal.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    252 views2 pages

    Ultratech and Jaypee Associates Deal

    Uploaded by

    Namita Dey
    UltraTech Cement Ltd struck a deal to acquire two cement plants from Jaiprakash Associates Ltd located in Madhya Pradesh for Rs 5,400 crore. The acquisition included plants with clinker production capacity of 2.1 million tonnes per annum (MTPA) and grinding capacity of 2.6 MTPA in Bela, and clinker capacity of 3.1 MTPA and grinding capacity of 2.3 MTPA in Sidhi. The deal helped UltraTech consolidate its position as the largest cement producer in India, while helping Jaiprakash Associates reduce its large debt burden. The Competition Commission of India approved the deal.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Ultratech and Jaypee Associates Deal

    UltraTech Cement Ltd struck a deal to acquire two units of Jaiprakash


    Associates Ltd located in Madhya Pradesh at an enterprise valuation of Rs
    5,400 crore ($853 million). The assets included:
    (a) integrated cement plant with clinker capacity of 2.1 MTPA and grinding
    capacity of 2.6 MTPA and 25 MW CPP at Bela, Madhya Pradesh
    (b) integrated cement plant with clinker capacity of 3.1 MTPA and grinding
    capacity of 2.3 MTPA and 155 MW CPP at Sidhi, MP.
    The deal helped UltraTech, the single-largest cement firm in the country in
    terms of capacity, to consolidate its lead over Swiss construction materials
    giant Holcim, which controls Ambuja Cements and ACC, two of the top four
    firms in the industry. On the other side it helped JAL to reduce its standalone
    debt of ~| 28,000 crore and consolidated debt of ~| 70,400 crore.
    The deal involved acquisition of an integrated cement unit with clinker
    capacity of 2.1 million tonnes per annum (mtpa) and cement grinding capacity
    of 2.6 mtpa at Bela in Madhya Pradesh. The other unit has clinker capacity of
    3.1 mtpa with cement grinding capacity of 2.3 mtpa at Sidhi in the same state.
    The deal also involved transfer of 25 MW power capacities at Bela and 155
    MW capacities at Sidhi.
    It augmented UltraTechs capacity at Satna cluster, one of the major cement
    manufacturing regions of the country.
    UltraTech said synergies and the surplus clinker capacity would allow it to add
    another 1.8-2.5 mtpa capacity with this acquisition in addition to the 4.9 mtpa,
    which comes with the deal.
    It took UltraTech's existing capacity from around 60 mtpa to around 65 mtpa.
    The transaction comes at a huge premium where UltraTech paid $174 a
    tonne. The overall transaction involved US$740m in non-convertible
    debentures (loan certificates) and shares worth US$16m for the facilities. It
    also assumed a net debt and negative working capital of US$128m
    associated with the businesses.
    But this corresponded to a similar rise in stock market valuations of large
    cement makers in the country.
    Ahead of a formal announcement of the deal, UltraTech Cement scrip rose 0.6
    per cent to close at Rs 2,533.25 a share in a weak Mumbai market on
    Tuesday. Jaiprakash Associates' scrip declined 2.9 per cent.
    The sale was part of Jaypee's programme to pay-down debt. It had sold
    assets worth US$3.6bn in pursuit of this aim. This included some US$1.6bn of
    assets in its cement business. However, it said that it remains India's thirdlargest cement producer, with a capacity of 22Mt/yr.
    Approval by CCI
    The Competition Commission of India (CCI) on 28 th April 2015 cleared
    Ultratech Cement's proposed deal to acquire two cement units of Jaiprakash
    Associates in Madhya Pradesh. The CCI said that the deal would not have
    any adverse impact on the market and even after the sale Jaypee Group will

    continue to be the third-largest cement manufacturer in the country with a 22


    million tonne annual capacity.
    Post deal
    On the basis of a review of the operational and financial performance of JAL
    for FY14 and H1FY15, CARE had downgraded the rating for both long term
    and short-term bank facilities. As a result of bank rating downgrade their cost
    of debt furthur increased resulting in more stress on their cash flows.

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