Displaying items by tag: UltraTech Cement
India: The Competition Commission of India has approved the proposed acquisition by UltraTech Cement of selected cement assets from Jaiprakash Associates and its associated company Jaypee Cement. The deal concerns 21.2Mt/yr of cement production capacity at a cost of US$2.47bn. The transaction is expected to complete in early to mid 2017.
India: Bokaro district officials in the state of Jharkhand will support the construction of a 1.5Mt/yr cement plant by UltraTech Cement in the Bokaro Industrial Area Development Authority (BIADA). UltraTech will be the second cement producer to build a plant in the BIADA region following Dalmia Cement. Local officials have met UltraTech staff to discuss infrastructure connections, the availability of slag and other raw materials and environmental clearance, according to the Times of India.
India: UltraTtech’s net sales have risen by 4% year-on-year to US$937m for the quarter that ended on 30 June 2016 from US$935m from the same period in 2015. Its net profit rose by 29% to US$116m from US$90m in the same period. During the quarter the cement producer has commissioned grinding plants at Nagpur in Maharashtra and Patliputra in Bihar. The company also confirmed that its acquisition of cement plants from Jaiprakash Associates is continuing.
Doing a cement deal the Indian way
06 July 2016Boy, is the UltraTech Cement and Jaiprakash Associates deal dragging on. The agreement by UltraTech to buy cement plants from Jaiprakash Associates reached its latest revision this week when UltraTech upped its offer to US$2.40bn from the US$2.36bn offered at the end of March 2016. The deal also includes an additional US$70m for a cement grinding plant under construction in Uttar Pradesh.
This time round the haggling took place to the background music of Jaiprakash Associates’ mounting debts. It owes US$4.45bn to a group of lenders led by ICICI Bank. A repayment window was due to close on 30 June 2016. Defaulting this deadline could have switched the account to non-performing asset status. So, according to reports in the Indian media, the lenders forced a strategic debt restructuring scheme on Jaiprakash Associates. Or in other words they took control of the company. Alongside all of this UltraTech was allegedly trying to renegotiate the terms of the deal agreed in March 2016 following amendments to the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015.
How paying more for the same assets benefits UltraTech remains to be seen. In addition US$1.78bn worth of Jaiprakash Associates’ debts will be transferred to UltraTech, according to Rahul Kumar, Director & CFO of Jaiprakash Associates. At US$118/t for new-ish production capacity it still seems like a good deal. Doubtless the devil lies in the (unseen) detail. Reports in the Indian media speculate that the lenders may have threatened UltraTech with rival bids.
To add to the confusion, the deal covers cement plants with a production capacity of 21.2Mt/yr but this total includes both integrated cement plants (clinker producing) and standalone cement grinding plants. Given the difference in cost to build a clinker production line compared to a grinding mill this makes assessing the value of the deal difficult.
UltraTech have described the purchase as a ‘geographic market expansion,’ which will allow its entry into markets of India including the Satna cluster in
Uttar Pradesh and Madhya Pradesh, Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh. It has also stated that its cement production capacity (clinker and grinding) will rise to 91.1Mt/yr following the deal. As ever, the latest revised agreement is dependent on shareholder, creditor, high court and regulatory approval. UltraTech plan to complete the transaction by July 2017. What can possibly go wrong!?
India: UltraTech Cement and Jaiprakash Associates have revised their deal for UltraTech to buy 21.2Mt/yr of cement production capacity from Jaiprakash Associates. The revised value of the deal is now US$2.47bn, up from US$2.40 agreed previously. UltraTech will have to pay an additional US$70m upon completion of a grinding unit under construction. The new agreement is an amendment to the 31 March 2016 scheme of arrangement., according to the Hindu newspaper.
The approval follows an agreement of Jaiprakash Associates’ lenders who invoked Strategic Debt Restructuring (SDR) scheme on 28 June 2016. This allowed the lenders may take control of the company and sell its assets to recover dues.
“Jaypee Group is determined to reduce its overall debt through its proactive divestment initiatives to help the group tide these current turbulent times caused by the economic slowdown,” said Manoj Gaur, Executive Chairman, Jaypee Group. The company has put together a committee of directors to explore its options to tackle its debt management.
UltraTech faces block to Jaiprakash Associates deal
01 July 2016India: Jaiprakash Associates has had problems meeting its financial commitments towards the purchase of some of its cement plants by UltraTech Cement. Sources quoted by the Mint newspaper said that the cement producer had met issues clearing statutory dues and providing necessary working capital for the plants under review. They added that UltraTech Cement had also sought additional funding ahead of the completion of the US$2.4bn deal. Both cement producers have claimed that the deal is still on track.
India: UltraTech’s net profit has risen by 8% year-on-year to US$479m for its financial year that ended on 31 March 2016 from US$449m in the same period in the previous financial year. Its net sales rose by 5% to US$3.8bn from US$3.6bn. It reported that its portland cement sales volumes grew by 8% to 46.9Mt in the 2015 – 2016 financial year from 43.4Mt. It noted that its operating costs fell due to improved operational efficiency, a better fuel mix and a fall in fuel prices.
The Indian cement producer commissioned a 6MW waste heat recovery (WHR) system at Chittorgarh, Rajasthan during the January to March 2016 quarter. Overall, it generates 59MW from WHR. Since commissioning cement grinding plants at Jhajjar, West Bengal and Patliputra, Bihar the company’s cement production capacity is 66.3Mt/yr. It also signed a Memorandum of Understanding to buy cement plants from Jaiprakash Associates in late February 2016. The cement plants altogether have a total cement production capacity of 22.4Mt/yr.
In its outlook UltraTech expects cement demand to grow by up to 8% in the 2016 – 2017 financial year. This will be supported by government infrastructure and housing development.
India: UltraTech Cement has commissioned a cement grinding plant in Pataliputra, Bihar. The 1.6Mt/yr plant is the company’s 15th grinding plant. It is intended to produce cement for markets in eastern India.
The new grinding plant increases the company’s production capacity to 69.3Mt/yr including overseas operations. The Indian cement producer has added 6.1Mt/yr in production capacity in the year that ended in March 2016.
India: Dilip Gaur has replaced K K Maheshwari as the managing director of Grasim Industries, with effect from 1 April 2016. Maheshwari will remain on the board as a non-executive director.
Gaur was previously the deputy-managing director of Ultratech Cement. Before that he worked for Birla Copper, Alexandria Carbon Black and Pan Century Edible Oils. He also worked for over 20 years with Hindustan Unilever. Gaur holds a bachelor of engineering degree in chemicals and took the Advanced Management Program at Harvard, US.
India: Jaiprakash Associates has revised a US$2.4bn deal to sell cement plants to and UltraTech Cement. The new deal excludes a 1.2Mt/yr cement plant in Karnataka. UltraTech will also spend US$71m to complete a cement grinding plant that is currently being built. UltraTech will now acquire Jaiprakash Associates cement plants in five states with total capacity of 21.2Mt/yr. Jaiprakash Associates will retain a cement capacity of 10.6Mt/yr.
A Memorandum of Understanding signed in February 2016 agreed the terms of the sale. However, currency fluctuations between the Indian Rupee and US Dollar have kept the US Dollar value of the revised deal at a similar amount despite a drop in the Indian Rupee amount. The sale is expected to take around 12 to 14 months to complete subject to statutory and regulatory approvals.