The Jaypee Group today said it plans to raise funds by diluting “minority” stake in Jaypee Cement Corp to a private equity firm for expansion and retiring debt.

“We plan to raise some funds by diluting a minority stake in Jaypee Cement Corp. We are mulling a couple of options, which include roping in a private equity firm,” a senior official of the company told PTI .

The diversified Jaypee Group, having interests in areas such as real estate, cement and hospitality among others, is the third largest cement maker in the country, with an installed capacity of 33.5 million tonnes per annum (MTPA) now.

Its flagship company Jaiprakash Associates, holds the majority of the cement business. However, the operations in Gujarat and Andhra Pradesh, having a total capacity of 9.8 MTPA, are under the aegis of Jaypee Cement Corp, which was recently hived off.

“We are yet to finalise how much stake will be diluted. The proceeds will be used to meet capacity expansion and retire debt, among others,” he said, adding that hiving off Jaypee Cement from JP Associates was done to raise funds.

However, he neither divulged the investment that would be required for capacity expansion nor the amount of debt that would be retired.

Jaypee Group is working on increasing its cement capacity to 36 MTPA by the end of 2012-13 and is in the process of evaluating various locations to take it to 50 MTPA capacity over next five years.

“The capacity addition will be done through brownfield and greenfield projects. We are not looking at acquisitions,” he said.

While it has a presence in 11 States in the country, Jaypee Group plans to add capacity in States where it does not have presence such as Karnataka in the South and Assam or Manipur in the North-East.

Jaypee Group sells cement across all regions, barring the South. A majority of its products go to the Central region where it clocked sales of 17 million tonnes last fiscal. It sold around five million tonnes each in the North, West and East.

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