Ultratech Buys Jaypee Cement Units For Rs 15,900 Cr

Mumbai: UltraTech Cement, a part of the Aditya Birla group, inked the much awaited deal to buy JaiPrakash Associates’ (JPA) 21.2 Million Tonn Per Annum (MTPA) cement capacity for Rs 15,900 crore on Thursday.

Apart from the enterprise value of Rs 15,900 crore, an additional Rs 470 crore will be paid by UltraTech for completion of the grinding unit. The deal includes 17.2 MTPA of existing cement capacity spread across the states of Uttar Pradesh Madhya Pradesh, Himachal, Uttarakhand and Haryana and an under-construction grinding unit of 4.0 MTPA at Uttar Pradesh.

Atul Daga, CFO of UltraTech Cement said the total capacity of the company post the acquisition will go up to 90 MTPA. UltraTech will take over Rs 11,500 crore debt from JPA's books and hopes to get it re-financed at around nine per cent rate due to its better credit ratings, he said. The balance will be paid through debt raised on books of UltraTech, he added. He believes UltraTech will be able to clear off all its existing debt by the time this fresh debt comes on its books.   He expects the deal to be completed in about 12-15 months. 

Daga sees the utilization level of the acquired plants going up to 60-70 per cent in a year from the 50 per cent now.  JPA has an Earnings Before Interest, Taxes, Depreciation And Amortization (EBITDA) per ton of less than Rs 600 and this might marginally pull down UltraTech's Rs 1,000 per ton EBITDA, he said. 

On Thursday, the share price of UltraTech traded strong on the Bombay Stock Exchange (BSE) and closed at Rs 3,227, up by 1.09 per cent. Jaiprakash shares closed at seven Rupees a share, up by four per cent. Analysts said the deal will give a major push to UltraTech, as the company will get a firm footing in the north — currently dominated by Ambuja Cements, ACC and Shree Cement.