According to local reports, UltraTech Cement Ltd is in talks to acquire Jaypee Group’s cement facility in Solan, Himachal Pradesh, at a cost of around Rs.4000 crore. The Solan assets would add 4 million tpa of cement to the company’s total production capacity, with the grinding unit and plant in consideration each having capacities of 2 million tpa.
As a result of a sluggish domestic market and poor macro-economic conditions, the Jaypee Group is one of several corporations in the Indian construction and cement sector that is looking to sell assets in order to mitigate rising debt.
Meanwhile, UltraTech Cement is striving to increase its domestic capacity to 70 million tpa by 2015, through the acquisition of new cement facilities in the northern and eastern states. The company will avoid investing in the south as, due to sluggish demand, the plants in the region are running at less than 60% of their designed capacities.
The plans to invest in Solan come only a few months after UltraTech’s Board of Directors approved the acquisition of Jaypee Cement’s Gujarat plant in September 2013. The Rs.3800 crore deal comprised of an integrated cement unit at Sewagram, a grinding facility at Wanakbori, a 57.5 MW coal-based thermal power plant, limestone reserves for over 90 years at current capacity and a captive jetty at Sewagram. The combined capacity of both the divisions of the Gujarat plant is 4.8 million tpa of cement, bringing the company’s overall production capacity to 59 million tpa. The transaction will be completed in mid-2014.
Edited from various sources by Rosalie Starling
Read the article online at: https://www.worldcement.com/asia-pacific-rim/21022014/ultratech_in_talks_to_acquire_jaypees_cement_assets_in_solan_784/