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Displaying items by tag: Jaiprakash Associates
UltraTech purchase of Jaiprakash Associates cement plants likely to complete by June 2017
01 March 2016India: UltraTech Cement's US$2.5bn proposed acquisition of Jaiprakash Associates' cement plants is expected to be completed by June 2017, according to UltraTech Cement.
"We have to ink definitive agreements and get permission from the High Courts. This will take time. The firm expects the agreement to be finalised in the next 12 - 15 months. Expect it to consummate by June 2017," said UltraTech Cement Chief Financial Officer Atul Daga.
Daga added that UltraTech is also looking at alternative routes in case proposed amendments to the Mines and Minerals (Development and Regulation) (MMDR) Act do not happen. In February 2016 the government took views from public, states and industry on amending the MMDR Act to include provisions allowing transfer of captive mines granted through procedures other than auction.
The transfer of captive mining leases, granted other than through auction, would allow banks and financial institutions to liquidate assets where a company or its captive mining lease is mortgaged. The move will allow mergers and acquisitions in the Indian domestic market, especially in the cement sector, in which several deals are currently on hold.
UltraTech Cement signed a Memorandum of Understanding to buy Jaiprakash Associates’ cement plants in late February 2016. Altogether, the cement plants have a total cement production capacity of 22.4Mt/yr.
India: UltraTech Cement has signed a Memorandum of Understanding to buy Jaiprakash Associates’ cement plants, which have a total cement production capacity of 22.4Mt/yr. The deal includes both integrated cement plants and cement grinding plants. The plants are situated in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Andhra Pradesh and Karnataka.
The acquisition also includes a 4Mt/yr cement grinding plant being built in Uttar Pradesh. UltraTech will pay an additional US$68.7m for this plant once it is completed. The deal will increase UltraTech’s total cement production capacity to 90.7Mt/yr from 68.3Mt/yr. The transaction is subject to regulatory approval.
Indian cement industry now on sale!
13 January 2016Last week we promised reasons to be cheerful for the cement industry. We only have one to offer this week but it's a good one. At present three Indian cement companies are on sale: Lafarge India, Reliance Cements and Jaiprakash Associates. If these sales complete then it represents an opportunity for the Indian cement industry to reorganise itself and stride forward when growth recovers.
Lafarge India upped its sales proposal to the Competition Commission of India (CCI) on 6 January 2016 to sell its entire 11Mt/yr portfolio. Originally as part of the LafargeHolcim merger agreements the CCI asked Lafarge to sell 5.2Mt/yr of production capacity in Chhattisgarh and Jharkhand in eastern India. However the deal was reliant on the original buyer, Birla Corporation, securing limestone mining rights. Birla failed to do so. Now Lafarge India has decided to sell everything instead. Naturally, following its Euro8bn spending spree in 2015 CRH has been linked to the sale by Indian media.
Then following press speculation Reliance Infrastructure confirmed to the Bombay Stock Exchange on 11 January 2016 that it was at an 'advanced stage of discussions with potential buyers for divesting the cement business of the company.' Reliance's cement arm, Reliance Cement, holds three cement plants in Maihar in Madhya Pradesh, Kundanganj in Uttar Pradesh and Butibori in Maharashtra with a total production capacity of 5.8Mt/yr. In addition to this, the company is also developing a 5Mt/yr cement plant at Wani in Maharashtra. The Reliance sale has been reported upon since early 2015. The difference this time is that Reliance responded to local press reports that it was about to sell to Birla Corporation or a couple of other private equity firms.
Finally, the third sale concerns Jaiprakash Associates' on-going attempts to sell its remaining cement assets to service its debts. Jaiprakash Associates cement subsidiary, Jaypee Cement, holds eight plants in India with a cement production capacity of 11Mt/yr. In addition it holds six cement grinding plants with a capacity of 10.7Mt/yr. Despite reported attempts to sell the entire division in one Jaypee has actually ended up selling its cement assets in a piecemeal fashion one or two at a time. The most recent sale being announced this week is to sell its Bhilai Jaypee Cement to Shree Cement. This follows other sales to HeidelbergCement and UltraTech in 2015.
None of these sales are new exactly but the combined production capacity of these plants comes to just under 28Mt/yr. This represents 9% of India's total national cement production capacity of 310Mt/yr. Any player somehow able to weasel their way into striking a deal for all of these plants would immediately become one of the country's biggest producers.
It would definitely be a case of buyer beware though. Credit agency ICRA recently reported that it expects that cement demand growth will be a 'modest' 4% in the 2015 - 2016 financial year before picking up in the following year. This follows poor growth in cement demand in the first half of 2015 and even declines in March and April 2015. ICRA also expected the country capacity utilisation to drop to 70% in the 2016 financial year, down from 77% in the 2012 financial year. That 7% drop in the utilisation is awfully close to the 9% of Indian national production capacity that the cement assets currently on sale from Lafarge India, Reliance Cement and Jaypee Cement. Unsurprisingly, the buyers of Indian cement assets have been picking and choosing their plants one-by-one so far.
Jaiprakash to sell Jaypee Bhilai plant stake to Shree Cement
07 January 2016India: In an attempt to service its US$5.99bn debt, Jaiprakash Associates has signed an agreement with Shree Cement to divest its stake in the 2.1Mt/yr Bhilai Jaypee Cement plant for an enterprise value of US$314 – 329m. Jaiprakash Associates is finding it difficult to service its debt due to various reasons, including a slowdown in the economy and some of its projects falling on the revenue front.
Jaypee Group revives talks with JSW to sell cement portfolio
26 October 2015India: To improve its finances, Jaypee Group has revived its negotiations with JSW to sell its entire 20 – 22Mt/yr cement portfolio. The top officials, including Manoj Gaur, Executive Chairman and CEO of Jaypee Group, met Sajjan Jindal, Chairman on JSW Steel, to discuss the acquisition. Jaypee Group has an outstanding debt of around US$11.6bn. The talks are still at early stage.
Indian government to cancel India Cements plant
24 September 2015India: The government has decided to cancel the allotment of a cement plant given to India Cements in Gumma, Shimla, Himachal Pradesh.
The decision was taken after India Cements expressed its unwillingness to start works, according to local media. "It has been decided to cancel the allotment as the company is no longer keen to set up the plant and they have failed to show any progress in the years since the allotment was made," said Mukesh Agnihotri, industry minister. He added that the government cabinet would need to confirm the allotment cancellation.
Agnihotri said that the government plans to invite global bids for the proposed cement plant in Chamba have been put on hold as Jaiprakash Associates, which had earlier been given the project, has moved to court. The project in Chamba was allotted to Jaiprakash Associates in 2006 and a memorandum of understanding was signed in February 2007 to establish a 2Mt/yr capacity cement plant.
The industry department issued notices to three cement plants in addition to Jaiprakash Associates as to why their plants should not be cancelled, as they had failed to set up facilities that had been approved several years ago. The three cement plants included units by Lafarge in Alsindi, India Cement in Gumma and Harish Cement in Sundernagar. After finding the replies unsatisfactory, the government cancelled the cement plants allotted to Jaiprakash Associates and India Cements. Some of the companies have already invested a lot of money, but could not start operation due to various factors, including clearances from different agencies like the Ministry of Forest and Environment. In some cases, locals have moved to court against the projects, citing loss of agricultural land and an adverse impact on the health of people.
UltraTech deal with Jaypee delayed by mine transfer legislation
01 September 2015India: UltraTech Cement is seeking clarification from the Indian government over the transfer of limestone reserves as part of its deal to buy two integrated cement plants in Madhya Pradesh from Jaypee Group, according to HT Media. A clause in the Mines and Minerals (Development and Regulation) Act 2015 barring the transfer of mines that were not allotted through auctions is delaying mergers and acquisitions (M&As) in the mining sector.
According to a clause in the new Act, transfer of the mining licence is allowed only for mines that have been auctioned. Most of the operational limestone mines in India were allotted and not auctioned. The Act allows for these reserves to be auctioned in the future. However, legal experts are divided on whether this clause will apply retrospectively.
UltraTech agreed to buy Jaiprakash Associates' cement plant with a clinker capacity of 2.1Mt/yr and a cement grinding capacity of 2.6Mt/yr at Bela in Madhya Pradesh in December 2014. It then agreed to buy a second plant at Sidhi with a clinker capacity of 3.1Mt/yr and a cement grinding capacity of 2.3Mt/yr. The deal included access to the limestone reserves in Madhya Pradesh.
The new legislation is also expected to affect Lafarge's sale of its east Indian assets to Birla Corp.
India: According to the Financial Express, Jaiprakash Associates is close to selling its 1Mt/yr capacity cement plant at Sikandarabad, Uttar Pradesh to HeidelbergCement for around US$78.6m.
If the deal materialises, it would be the fifth cement asset sale by Jaiprakash Associates in little over a year. The group is looking to sell assets, including cement and power plants, to reduce its large debt. The aggregate debt of the group at the end of the 2014 financial year, which ended on 31 March 2014, stood at around US$8.65bn. Though it has so far divested assets worth US$2.36bn, the impact of the asset sales is yet to reflect on the group's balance sheet. It aims to cut down debt further by around US$1.57bn by the end of the current 2016 fiscal year, which ends on 31 March 2016. So far, Jaiprakash Associates has divested around 13Mt/yr of its overall cement capacity and is left with around 23Mt/yr.
Unnamed sources have said that Jaiprakash Associates also plans to sell two more of its cement plants, in Baga and Bagheri in Himachal Pradesh and Balaji in Andhra Pradesh, but the matter is stuck due to valuation issues. Aditya Birla Group's UltraTech Cement and HeidelbergCement have reportedly been in talks regarding their acquisition.
India: UltraTech Cement plans to buy Jaiprakash Associates' Bhilai plant for US$330 – 345m. The plant has US$87.5m of debt.
Competition Commission of India clears Ultratech to buy two cement plants from Jaiprakash Associates
29 April 2015India: The Competition Commission of India (CCI) has cleared Ultratech Cement's proposed US$853m deal to buy two cement plants from Jaiprakash Associates in Madhya Pradesh. The acquisition is for a 2.6Mt/yr cement plant in Bela, with a 25MW captive power plant, and a 2.3Mt/yr cement plant in Sidhi with a 155MW captive power plant, according to the Economic Times.
"Looking at the details of the matter, the combination would not have any adverse impact on the market," the CCI order said.
UltraTech's cement production capacity will rise to 65Mt/yr. The company has set a target to reach 71Mt/yr by 2016. Following the sale Jaiprakash Associates, also know as Jaypee Group, will remain the country's third largest cement producer with a production capacity of 22Mt/yr.