After acquiring Jaiprakash Associate’s two cement plants in Madhya Pradesh, Aditya Birla Group is keen to buy the former’s Bhilai cement facility too.
The Group’s cement arm Ultratech is in talks with Jaiprakash Associates Ltd (JAL) for acquiring its 2.2 million tonne (MT) Bhilai unit. Both the firms have approached SAIL for its nod for the deal as the domestic steel giant has a 26 per cent stake in the facility, sources said.
Meanwhile, the company in a BSE filing said, “The Company, in the course of its business, evaluates various proposals. No proposal has reached the stage which would merit intimation under the listing agreement….”
The issue will be discussed at UltraTech’s annual general meeting scheduled for tomorrow in which Group Chairman Kumar Mangalam Birla will address the shareholders highlighting the industry issues, its impact on business, strategic moves made and the future outlook.
Queries sent to Aditya Birla Group spokesperson regarding the proposed acquisition of Bhilai facility, however remained unanswered.
JAL is the flagship company of Jaypee Group and is the third largest cement producer in the country.
Shares of JAL surged 11.71 per cent to Rs 9.73 on bourses following the reports of sale of Bhilai unit. JAL’s Bhilai facility in Chhattisgarh has a production capacity of 2.2 MT per annum.
SAIL has about 26 per cent stake in the plant. However, a SAIL spokesperson could not furnish details regarding the deal.
Earlier this year, Ultratech shareholders and creditors had approved the firm’s acquisition of JAL’s cement units at Bela and Sidhi in Madhya Pradesh for Rs 5,400 crore, that have a cement capacity of 4.9 MTPA and a thermal power generation capacity 180 MW TPP.
In one of the biggest deals in the cement sector, Ultratech’s board had approved the acquisition for JAL’s Bela unit which has 2.1 MTPA clinker and 2.6 MTPA cement grinding capacity and Sidhi unit which has 3.1 MTPA clinker and 2.3 MTPA cement grinding capacity.
This deal had followed Ultratech’s acquisition of JAL’s cement plant in Gujarat having 4.8 mtpa capacity for Rs 3,800 crore last year.
Ultratech’s consolidated net profit had declined to Rs 591 crore for the first quarter ended June 30, 2015-16 as against Rs 628 crore in the year-ago period.
Debt-ridden JAL would have about 20 MTPA capacity after this sale. The company has been selling cement and power assets to pare debt and improve its balance sheet.
“The group has divested assets of over Rs 20,000 crore, displaying the intent of the group’s founder of maintaining credibility with all its stakeholders including lenders, creditors and shareholders,” Manoj Gaur, Executive Chairman, JAL had said earlier.