UltraTech to buy 51% in Jaypee Cement unit for Rs4,000 crore
11 September 2013
Aditya Birla Group firm UltraTech Cement, India's largest and among the world's leading manufacturers of cement, has agreed to acquire a 51-per cent stake in Jaypee Cement's 5 million tonne per annum Gujarat facility in deal worth around Rs4,000 crore.
Jaypee Cement plans to utilise the sale proceeds to meet capacity expansion and for retiring past debt, among other things.
Aditya Birla Group, the country's largest cement maker with 54 mtpa capacity, runs cement business through UltraTech Cement and plans to increase its capacity by another 10 mtpa by 2015.
The deal was struck after negotiations that lasted a little over a year.
Jaiprakash Associates, the flagship company of the Jaypee Group, holds a majority stake in Jaypee Cement Corporation's operations in Gujarat and Andhra Pradesh having a total capacity of 9.8 mtpa.
Jaypee Cement has been looking for various options, including offloading stake to some private equity, to raise funds for capacity expansion and debt repayment, among others things.
Jaypee Group is the country's third-largest cement maker with an installed capacity of 33.5 mtpa. And, despite the current stake sale, the group is looking at increasing its cement capacity to 36 mtpa by the end of the current fiscal and further to 50 mtpa over the next five years.
Other contenders for the Jaypee Cement stake included French building materials giant Lafarge.
Meanwhile, in an earlier deal, a group company of Jaiprakash Associates had, in 2008, acquired Bina Power Supply Ltd (BPSL) from the Aditya Birla Group.
Besides cement, the Jaypee Group has interests in areas such as real estate, cement and hospitality.
Mumbai-based Aditya Birla Group is an Indian multinational conglomerate with operations in 33 countries and more than 136,000 employees worldwide.
The group has interests in sectors such as viscose staple fibre, metals, cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, insulators, financial services, telecom, BPO and IT services.