The start of bankruptcy proceedings against Jaiprakash Associates has laid it wide open as an acquisition target by the Adani group, JSW group and others who are expanding through acquisitions, analysts said.
Earlier this month, the National Company Law Tribunal directed formal insolvency proceedings against JP Associates effectively putting a stop to the agreement between the firm and Dalmia Bharat, which had agreed to acquire the cement, clinker and power plants for ₹5666 crore. Dalmia Bharat said it would be engaging with the interim resolution professional and the company on this.
“This implies Dalmia will have to rebid for JAL’s assets as all binding agreements with the now suspended JAL board, in practical terms, are null and void,” said Nomura Securities in a note on Dalmia Bharat. “We see increased competition from companies such as Adani and JSW that have the resources to buy the entire JAL group,” it added.
Sources said both the groups were interested in the assets of JP Associates and are likely to make bids when the process gets started, which is likely to take some time as there are legal tangles to unravel.
Adani group and JSW group did not respond to emails seeking clarification about their possible interest in JP Associates.
There have been reports in the past of the Adani group being interested in one of the cement plants of JP Associates. The group’s cement arm Ambuja Cements announced the acquisition of Hyderabad-based Penna Cements this month for ₹10,420 crore and the group is learnt to have built up a war chest of around $3-3.5 billion for acquisitions in this sector. It is in a race to catch up with market leader Ultratech and achieve a capacity of 140 million tonnes by 2028.
JSW Cement is also on the lookout for opportunities in the sector. The last time it made an acquisition was that of Shiva Cement in 2017 for under ₹100 crore. It has plans to triple its capacity to 60 million tonnes over the next five years. Its initial public offering scheduled for the next fiscal year will be used to augment capacity.
Jaiprakash Associates has dues of ₹51,496 crore owing to 29 banks and financial institutions and more than 1,500 homebuyers under its real estate project.
The company reported a loss of ₹1,340 crore in FY24; very little changed from a year ago while revenue fell about 10 per cent to ₹6568 crore. Along with its joint ventures it has an annual cement manufacturing capacity of over 10 million tonnes.