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The Adani group, which with ACC and Ambuja Cement in its stable is India’s second largest cement maker, is seeking to, well, cement its place on the leaderboard. It has started drawing up plans to acquire the Jaypee group’s cement assets of over 9 million tonnes per annum (mtpa), people aware of group’s plans told Moneycontrol after lenders to the beleaguered company initiated insolvency and bankruptcy proceedings against it in early June
On June 3, the National Company Law Tribunal (NCLT) court in Allahabad admitted Jaiprakash Associates Ltd for corporate insolvency, nearly six years after lender ICICI Bank had filed an application.
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The people cited said that the beginning of insolvency proceedings against Jaiprakash has opened a window of opportunity for Adani to acquire the company’s cement and associated assets such as limestone mines and a power plant. The group has already started working on plans to acquire these assets, they added.
To be sure, the people cited cautioned that these are early days for the bankruptcy proceedings, with Jaiprakash being admitted to the NCLT last month and its committee of creditors having met only once so far, on June 29. No formal sale process for assets of Jaiprakash Associates has been initiated as of now.
The insolvency proceedings against Jaiprakash Associates is expected to heat up competition in the fast consolidating cement industry, which has been witnessing large players like UltraTech, Adani, Dalmia and JSW Cement vie for assets across the country.
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On June 27, UltraTech bought a 19.44 percent stake in India Cements at Rs 267 per share. The Aditya Birla Group company will buy another 3.4 percent stake at up to Rs 285 per share, taking the total acquisition cost to just above Rs 1,900 crore. UltraTech’s move on India Cements is seen as a preemptive measure to ward off other cement players.
2022 deal
Dalmia Bharat had signed a deal in 2022 with Jaypee to acquire the latter’s cement and power assets for an enterprise value of Rs 5,666 crore. However, Dalmia has been unable to close the deal so far due to pending approvals from lenders of Jaiprakash Associates. Further, an ongoing arbitration between Jaiprakash and UltraTech Cement over one of the assets, JP Super Dalla, may also have delayed matters.
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Dalmia’s proposed deal included acquisition of 2.2 million tonnes of cement capacity at Bhilai along with 3.3 million tonnes of clinker at Babupur, in Madhya Pradesh, and JP Super , in Uttar Pradesh. In the case of the 2 mtpa cement plant at Nigrie in Madhya Pradesh, Dalmia was to enter into a seven-year lease agreement with the option to purchase the unit at any time within the lease period. The acquisition of the JP Super asset was contingent on the outcome of an arbitration case between Jaiprakash Associates and UltraTech Cement.
UltraTech Cement in the past had said that it planned to take over Jaiprakash Associates’ Dalla Super (earlier known as JP Super) cement asset in Uttar Pradesh after the completion of the arbitration process. These assets were part of a deal between UltraTech and Jaiprakash Associates in 2016.
Emails sent to the Adani group, Ultratech Cement and Dalmia Bharat did not elicit a response.
Also read: UltraTech keen to take over JP Super despite new deal between Jaypee and Dalmia Cement
“The Dalla asset, it’s under arbitration, let that process get completed, and we’ll then take over that asset,” Atul Daga, executive director and chief financial officer at UltraTech, told analysts in a post-earnings call for the quarter ended March 2023, as reported by Moneycontrol on May 17, 2023.
Adani’s cement acquisitions
Last month, Ambuja Cements said that it would acquire Hyderabad-based Penna Cement Industries Ltd for an enterprise value of Rs 10,422 crore, marking the Adani group’s third acquisition since entering the cements business less than two years ago.
The Penna acquisition will add 14 mtpa to Adani’s cement capacity, taking total capacity to 89 mtpa.
In December 2023, the group acquired a controlling stake in Sanghi Industries in a deal valued at Rs 5,185 crore, adding 6.1 mtpa capacity to Adani’s portfolio.
