In one of the biggest transactions in the cement industry, the debt-laden Jaypee group signed a binding agreement on 28-feb-2016 to sell its cement business, with a capacity of 18.4 million tonnes per annum (mtpa), to the Aditya Birla Group’s UltraTech Cement, for an enterprise value of Rs 16,500 crore.Under the deal, UltraTech will pay an additional Rs 470 crore for completion of the grinding unit for 4 mtpa capacity under implementation.
Deal also includes the two plants in Madhya Pradesh that were part of an earlier agreement scrapped on 26 feb. 2016 . The deal had been cancelled as the Mines and Minerals Development and Regulation (MMDR) Act prohibits transfer of mines. The government is expected to allow the transfer by making changes to the Act in the Budget session.
Total valuation of Rs 16,500 crore for 18.4 mtpa operating capacity is certainly at a discount to what it would have commanded if the assets were sold separately. UltraTech has been able to get a good deal as there are not many buyers for such a large capacity,” said a banker familiar with development.
-The cement capacity of Jaypee is based in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Andhra Pradesh and Karnataka.
-Jaypee was aggressive in selling assets to raise about Rs 22,000 crore, but debt levels are estimated to be still up 18 per cent over the past two years.