Debt-ridden Jaiprakash Associates on Thursday announced the part sale of its cement business to the Kumarmangalam Birla-led Ultratech for Rs 15,900 crore, marking the biggest consolidation in the cement sector.

However, the size of the deal announced last month has been reduced from Rs 16,500 crore as Jaiprakash Associates Ltd (JAL) decided not to sell its cement plant in Karnataka with a capacity of 1.2 million tonnes per annum (MTPA).

In a filing to the BSE, JAL said: “Board today approved the definitive agreement with Ultratech Cement Ltd (UTCL) for sale of part of its cement business comprising identified operating cement plants with an aggregate capacity of 17.2 MTPA spread over the states of Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, besides a grinding unit of 4 MTPA capacity, which is currently under implementation in UP.”

Both the parties have mutually agreed to exclude Shahabad plant in Karnataka from the transaction, it added. “The total enterprise value is Rs 15,900 crore and additional amount of Rs 470 crore shall be paid by UTCL for completion of the grinding unit under implementation,” it said. The deal will help JP Associates reduce its debt, which runs into thousands of crores of rupees.

The transaction is subject to various regulatory approvals including stock exchanges, Competition Commission of India, shareholders and creditors as well as sanction of scheme of arrangement by the high courts of Mumbai and Allahabad.

“The consummation of transaction is expected to take 9-12 months,” JAL said in the filing.

[Source:- The Hindu]