The cement sector is on a consolidation spree with two more acquistion deals.
While India Cements has announced its deal to sell its Madhya Pradesh plant to Parth Jindal–led unlisted JSW Cement for ₹477 crore, the Adani Group, in a separate deal, is close to acquiring the cement asset of Jaiprakash Associates being put on the block by the company to avoid being dragged to insolvency proceedings.
The country’s second largest cement maker, Adani Group is expected to pay about ₹4,800 crore for the 2 million tonne (mt) per annum grinding unit being sold in Madhya Pradesh, and the deal is expected to close in this week, sources said.
To reduce debt
India Cements said it has entered into a Share Purchase Agreement with JSW Cement on Monday to divest the entire shareholdings held by it in Springway Mining for ₹477 crore and consequently, SMPL ceased to be the wholly-owned subsidiary of the company. India Cements, which has a gross debt of ₹2,900 crore, plans to reduce debt by ₹550 crore this year.
SMPL owns a limestone bearing land at Pawai Tehsil, Panna District and is in the process of setting up a cement plant in Damoh district in Madhya Pradesh. The networth of the company is ₹14.2 crore.
India Cements said it has received a consideration of ₹374 crore on Monday and the remaining ₹103 crore will be released upon completion of certain conditions of the share purchase agreement.
JP board approves sale
The Board of Jaiprakash Associates cleared the proposal to divest the company’s significant cement business to augment its ongoing efforts to reduce debt.
As part of the debt reconstruction deal signed with the lender, Jaiprakash Associates settled ₹11,689 crore by selling a portion of cement plants to UltraTech Cement in 2017. The residual cement plant, held by JP Power Ventures, is being sold to meet the debt obligation and avoid a default.
To invest ₹20,000 cr in Ambuja
Adani Group last month completed the acquisition of Ambuja Cement and ACC combine capacity of 68 mt from Switzerland-headquartered Holcim Group for about ₹81,700 crore.
Gautam Adani-led Group is planning to invest ₹20,000 crore in the listed entity Ambuja Cement to fuel further growth through both organic and inorganic route. Adani Group has already announced plans to expand capacity to 140 mtpa in next five years.