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Concluding the largest asset resolution in the country, lenders consortium led by ICICI Bank has transferred part of the debt of Jaiprakash Associates Ltd and Jaypee Cement Corporation Ltd from a stressed account to an AAA-rated new company.
This comes after the Aditya Birla Group announced that it has completed the acquisition of JP Group’s cement plants for ₹16,189 crore, giving a major boost to the stressed asset sale undertaken by banks.
Chanda Kochhar, MD & CEO, ICICI Bank, said: “This is the largest asset resolution in the country so far, and I hope that this landmark transaction will pave the way for more such resolutions. It is also heartening to note that this is the largest transaction in India’s cement industry, thus far.”
As part of the deal, UltraTech will take over JP Associates debt of ₹12,000 crore along with ICICI Bank debt of ₹5,300 crore and get access to operate six integrated cement plants and five grinding units in Himachal Pradesh, Uttar Pradesh, Uttarakhand, Madhya Pradesh and Andhra Pradesh with total capacity of 21.2 million tonnes. JP Associates current debt stand's at ₹28,000 crore.
Kumar Mangalam Birla, Chairman, UltraTech Cement, said the acquisition is essentially for geographic market expansion, enabling the company’s entry into the high-growth markets of India.
Post the deal, UltraTech will have 18 integrated plants, one clinker unit, 25 grinding units and seven bulk terminals with cumulative capacity of 93 million tonnes per annum.
UltraTech Cement will become the fourth largest cement company in the world (excluding China) and largest in India with higher margin.
Creating synergies in manufacturing, distribution and logistics offer many advantages, said Birla, adding that economies of sale and reduced lead-time to market will be achieved to enhance competitiveness and benefit for customers, besides creating value for stakeholders, he said.
UltraTech announced its intention to take over the troubled JP Cement for ₹15,900 crore in March 2016, and earlier this year, the valuation was increased to ₹16,189 crore.
The closure of UltraTech-JP deal comes a week after banks clearing the ₹86,000-crore Rosneft-Essar Oil deal which will also help banks reduce their NPA. Essar Oil owed over ₹26,000 crore in debt to 23 lenders led by SBI, apart from a ₹1,290 crore to LIC.
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