The Adani group, which is the second-largest cement manufacturer in India behind ACC and Ambuja Cement, is attempting to, well, cement its position at the top. The organization has begun developing plans for buying the cement assets of the Jaypee group, which total over 9 million tonnes annually (mtpa). This comes after lenders to the struggling company filed for bankruptcy and insolvency in early June.
Almost six years after lender ICICI Bank submitted an application, on June 3, the National Company Law Tribunal (NCLT) judge in Allahabad allowed Jaiprakash Associates Ltd for corporate bankruptcy.
According to the persons quoted, Adani now has the chance to purchase the company's cement as well as related assets including power plants and limestone quarries, thanks to the start of Jaiprakash's bankruptcy procedures. They said that the team has already begun developing strategies to purchase these properties.
Indeed, the individuals mentioned did warn that the bankruptcy process is still in its early stages. Jaiprakash was just accepted to the NCLT last month, and its committee of creditors has only convened once, on June 29. As of right present, no official procedure has been started to sell the assets of Jaiprakash Associates.
Large competitors like UltraTech, Adani, Dalmia, and JSW Cement have been vying for assets across the nation in the fast-consolidating cement business; it is anticipated that the insolvency proceedings against Jaiprakash Associates would intensify competition in this sector.
At Rs 267 per share on June 27, UltraTech acquired a 19.44% ownership in India Cements. With the additional 3.4 percent stake purchase, the Aditya Birla Group firm would pay up to Rs 285 per share, bringing the total acquisition cost to slightly over Rs 1,900 crore. The acquisition of India Cements by UltraTech is viewed as a preventative step to deter other cement companies.
2022 agreement
Dalmia Bharat and Jaypee had an agreement in 2022 for the latter's power and cement assets to be acquired by the former for an enterprise value of Rs5,666 crore. However, because Jaiprakash Associates' lenders are still awaiting permission, Dalmia has not been able to complete the transaction. Delays may also have resulted from an ongoing dispute involving one of the properties, JP Super Dalla, between Jaiprakash and UltraTech Cement.
The planned agreement between Dalmia and JP Super in Uttar Pradesh and Babupur in Madhya Pradesh included the purchase of 2.2 million tonnes of cement capacity at Bhilai and 3.3 million tonnes of clinker. Dalmia was required to sign a seven-year leasing deal for the 2 mtpa cement factory in Nigrie, Madhya Pradesh, with the option to buy the unit at any point during the lease term. The resolution of an arbitration action involving Jaiprakash Associates and UltraTech Cement was a requirement for the purchase of the JP Super business.
In the past, UltraTech Cement had said that, following the conclusion of the arbitration procedure, it intended to acquire the Uttar Pradesh cement asset owned by Jaiprakash Associates, formerly known as JP Super. These assets were acquired by UltraTech and Jaiprakash Associates in a 2016 transaction.
In a post earnings call for the quarter ending March 2023, as published on May 17, 2023, Atul Daga, executive director, and chief financial officer of UltraTech, said to analysts, "The Dalla asset, it's under arbitration; let that process get completed, and we'll then take over that asset."
