UltraTech to buy JP cement plants for ₹16,500 crore.

UltraTech Cement recently agreed to buy 18.40 million tonne per annum (mtpa) of cement capacity from Jaiprakash Associates for an enterprise value of ₹16,500 crore. UltratTech will invest an additional ₹470 crore to complete an ongoing project to set up 4 mtpa of grinding units.

Kumar Mangalam Birla-owned UltraTech will acquire the cement plants with a total capacity of 22.4 mtpa in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh, Uttarakhand, Andhra Pradesh and Karnataka. The deal will catapult UltraTech’s capacity to 90.7 million tonnes per annum from the current 68.3 mtpa, making it one of the top cement producers in the world. The assets will also give UltraTech access to the markets of Satna, UP East, Himachal Pradesh and coastal Andhra where it does not have a presence now.

The new deal comes on the heels of UltraTech cancelling an earlier deal with Jaiprakash Associates to buy 5 mtpa cement capacity after the Bombay High Court denied approval to the proposal, citing the Mines and Mineral Development and Regulation Act, which does not allow transfer of captive mines that are not won through auction.

The latest deal may not raise issues of mining rights as the JP group may spin off the entire cement asset, including mining leases, into a separate company and sell the stake to UltraTech.

HBL