Dalmia Bharat signs binding agreement for acquisition of cement assets of Jaiprakash Associates

27 Apr 2023 , 09:00 AM

On Wednesday, Dalmia Bharat announced that in accordance with an earlier announcement, it has signed binding agreement to purchase the cement assets of the indebted Jaiprakash Associates Ltd (JAL).

The JP Super Cement Plant in Uttar Pradesh will be purchased by Dalmia Cement (Bharat) Ltd (DCBL), a Dalmia Bharat subsidiary, for an enterprise value of Rs1,500 crore and expenditures and expenses of up to Rs190 crore. However, according to a regulatory update from Dalmia Bharat Ltd (DBL), this will depend on a number of permits and approvals pertaining to the JP Super plant and mines.

Additionally, it depends on ‘fulfilling certain precedent conditions, including the result of the ongoing arbitration between JAL and Ultratech Cement Ltd.’

On December 12, 2022, DBL made the announcement that it will buy the cement assets of JAL, the parent business of the Jaypee Group, and its affiliated companies for a total enterprise value of Rs 5,666 crore.

Additionally, on Tuesday, DCBL completed a share purchase agreement to acquire 74% of Bhilai Jaypee Cement Ltd (BJCL) for an estimated enterprise value of Rs 666 crore.

‘Subject to fulfillment of certain prerequisite conditions, DCBL has also signed a long-term lease agreement (having a term of seven years) with Jaiprakash Power Ventures Ltd for its Nigrie Cement Grinding Unit of 2 million MTPA (Nigrie Unit) located at Singrauli in Madhya Pradesh,’ it added.

According to DBL, DCBL has the option to buy the Nigrie Unit at any moment during the lease period for a price of Rs250 crore.

In December, DCBL and JAL and its associated firm signed into a ‘binding framework agreement for the acquisition of clinker, cement, and power plants from JAL and its associate company.’

The agreement has an enterprise value of Rs 5,666 crore and includes a total cement capacity of 9.4 million tonnes per year (MTPA), along with a clinker capacity of 6.7 MTPA and thermal power plants of 280MW. These resources are situated in Uttar Pradesh, Chhattisgarh, and Madhya Pradesh.

In a similar filing, JAL also acknowledged the events and stated that it had ‘executed necessary agreements with DCBL’ for the sale of the Uttar Pradesh-based Jaypee Super Cement Plant for Rs 1,500 crore.

Additionally, it has engaged in a share purchase agreement for DCBL to purchase 74% of the outstanding shares of BJCL for a total enterprise value of Rs666 crore.

This arrangement is subject to a few prerequisites, such as Jaypee Group’s agreement with Assets Care & Reconstruction Enterprise Limited (ACRE) and SAIL’s permission of substituting Dalmia Group for Jaypee Group as the JV partner, according to the statement.

After UltraTech, Adani Cement (which just joined the industry by acquiring ACC and Ambuja Cement), and Shree Cement, Dalmia is currently India’s fourth-largest cement manufacturer.

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