Dalmia Bharat Executes Definitive Agreements With JAL To Acquire Cement Assets

Dalmia Bharat on Wednesday said it has executed definitive agreements with debt-ridden Jaiprakash Associates Ltd (JAL) to acquire the latter's cement assets as per an earlier announcement.

Dalmia Cement (Bharat) Ltd (DCBL), a subsidiary of Dalmia Bharat, on Tuesday executed definitive agreements with JAL for the acquisition of JP Super Cement Plant in Uttar Pradesh at an enterprise value of Rs 1,500 crore and costs and expenses of up to Rs 190 crore.

However, this will be subject to various clearances and approvals related to JP Super plant and mines, said a regulatory update from Dalmia Bharat Ltd (DBL).

Moreover, it is also subject to "fulfilling certain conditions precedent including the final outcome of the pending arbitration between JAL and Ultratech Cement Ltd."

On December 12, 2022, DBL had announced that it will acquire cement assets of Jaypee Group's flagship company JAL and its associate firm at an enterprise value of Rs 5,666 crore.

As part of that, DCBL also executed a share purchase agreement on Tuesday for acquisition of 74 per cent shareholding of Bhilai Jaypee Cement Ltd (BJCL) at an enterprise value of Rs 666 crore.

"DCBL has also signed a long-term lease agreement (having a term of seven years) with Jaiprakash Power Ventures Ltd for its Nigrie Cement Grinding Unit of 2 million MTPA (Nigrie Unit) located at Singrauli in Madhya Pradesh, which is subject to fulfilment of certain conditions precedent," it said.

DCBL has the option to purchase the Nigrie Unit anytime within the lease period at an enterprise value of Rs 250 crore, DBL said.

In December, DCBL had entered into a "binding framework agreement for the acquisition of clinker, cement and power plants from JAL and its associate company."

The deal includes a total cement capacity of 9.4 million tonne per annum(MTPA), along with a clinker capacity of 6.7 MTPA and thermal power plants of 280MW at an enterprise value of Rs 5,666 crore, it added. These assets are located in Madhya Pradesh, Uttar Pradesh and Chhattisgarh.

In an identical filling, JAL also confirmed the developments and said it has "executed necessary agreements with DCBL" for divestment of Jaypee Super Cement Plant located in Uttar Pradesh at an enterprise value of Rs 1,500 crore."

It has also entered into a share purchase agreement for the acquisition of 74 per cent shareholding of BJCL by DCBL for an enterprise value of Rs 666 crore.

"This agreement is subject to certain conditions precedent, including Jaypee Group’s settlement with Assets Care & Reconstruction Enterprise Limited (ACRE) and SAIL’s approval for taking Dalmia Group as the JV partner in place of Jaypee Group," it said.

According to JAL, this is in continuation with the signing of a binding framework agreement and definitive agreements by JAL and its associate company with DCBL, regarding divestment of certain cement, clinker and power plants for an enterprise value of Rs 5,666 crore in furtherance of the company’s continuing endeavour to reduce its debt.

The acquisition will help Dalmia expand its footprint into the central region.

Dalmia is presently the fourth largest cement manufacturer in India after UltraTech, Adani Cement (which recently entered into the segment by acquiring ACC and Ambuja Cement) and Shree Cement.