Debt-ridden Jaiprakash Associates has decided to retain the five-million-tonne Shahabad plant in Karnataka, while selling the remaining 17.20-million-tonne. Subsequently, the deal size was reduced to ₹15,900 crore from ₹16,500 crore.
Last month, UltraTech Cement had agreed to buy Jaiprakash Associates' cement factories with cumulative capacity of 22.4 in the six States for an enterprise value of ₹16,500 crore.
The inclusion of the Karnataka unit in the deal would have led to objection by the Competition Commission of India as UltraTech Cement already has a substantial production capacity in the State. The current assets are spread over Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, besides a grinding unit of four million tonnes being set up in Uttar Pradesh.
Jaypee Group would retain 10.60 million tonnes cement capacity spread over Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka.
The transaction is expected to be completed in 9-12 months, said Jaiprakash Associates in a statement on Thursday.
Manoj Gaur, Executive Chairman, Jaiprakash Group, said the company has taken steps to tide over turbulent times caused by economic slowdown and would take further steps to prove its credentials as a trustworthy organisation.
ICICI Securities assisted Jaiprakash Associates in the deal.
“Jaypee Group in consultation with ICICI Bank has been selling various assets in its cement and power businesses to take care of its debt obligations. These sales have helped bring down the debt to some extent.
“This sale will further bring down the level of debt in the Jaypee Group.
“ICICI Bank is also working with Jaypee Group to find solutions to further reduce the debt burden,” said an ICICI Bank spokesperson.