Dalmia Cement (Bharat) Ltd. (DCBL), a 100% subsidiary of Dalmia Bharat, has signed definitive agreements for the acquisition of Jaiprakash Associates Ltd.’s (JAL) cement assets. JAL is the flagship company of the Jaypee Group.
This information was given by respective stock filings by Dalmia Bharat and JAL dated 26th April 2023.
DCBL to Buy Assets of JP Super Cement & Bhilai Jaypee Cement
DCBL will be acquiring JAL’s JP Super Cement plant in Uttar Pradesh for an enterprise value of Rs. 1,500 crore. Acquisition costs, which include the costs and expenses for various requisite clearances for JP Super Cement plant and mines, will be borne by DCBL up to a sum of Rs. 190 crore. The companies further clarified that this acquisition is subject to required approvals, as well as to the outcome of the ongoing arbitration between JAL and Ultratech Cement regarding JP Super Cement plant and mines.
In addition to JP Super’s acquisition, Dalmia Cement (Bharat) Ltd. will purchase 74% stake in Bhilai Jaypee Cement Limited (BJCL) for Rs. 666 crore (enterprise value). JAL clarified that this transaction is subject to the settlement of Jaypee Group with Assets Care & Reconstruction Enterprise Limited (ACRE). Further, since BJCL is a Joint Venture (JV) between Jaypee Group and Steel Authority of India Ltd. (SAIL), the aforementioned transaction is also subject to SAIL’s approval of DCBL as Jaypee’s JV partner in Bhilai Jaypee Cement Ltd.
Dalmia to Sign 7-Year Lease Agreement for Jaypee Power Ventures’ Cement Grinding Unit
DCBL is in process of signing a long-term lease agreement, which has a specified term of 7 years, with Jaypee Power Ventures Ltd. (JPVL). This agreement is for JPVL’s 2 Million Metric Tonnes Per Annum (MMTPA) Nigrie Cement Grinding Unit which is located in Singrauli, Madhya Pradesh.
Dalmia Bharat clarified that the signing of this lease agreement is subject to the fulfilment of requisite conditions. Moreover, DCBL will have the option of purchasing JPVL’s Nigrie unit for an enterprise value of Rs. 250 crore anytime during the lease period.
Sale of Assets Expected to Ease JAL’s Standing Debts
Jaiprakash Associates Ltd’s sale of its cement assets is expected to ease its outstanding debt. As per JAL’s stock filing dated 29th April 2023, the company has defaulted on Rs. 4,161 crore loan, which includes a principal amount of Rs. 1,653 crore and an interest of Rs. 2,508 crore.
Earlier in February 2023, Competition Commission of India (CCI) cleared DCBL’s acquisition of JAL’s cement, clinker and power assets, valued at about Rs. 5,666 crore.
About Dalmia Cement (Bharat) Ltd.: Established in 1939, Dalmia Cement (Bharat) Limited is a subsidiary of Dalmia Bharat Limited. The Delhi-headquartered company has 14 units for cement manufacturing and grinding spread across 10 states and has a production capacity of 37 MMTPA.