KKR-backed Dalmia Cement (Bharat) has struck a deal to buy 74 per cent held by Jaiprakash Associates in its cement joint venture with steel maker SAIL for Rs 690 crore ($113 million), as per a stock market disclosure. The total enterprise value of the deal, including debt, is pegged at Rs 1,150 crore.
This would mark the second such asset sale in the cement business by Jaypee group, whose flagship firm is Jaiprakash Associates. In September last year Jaypee Cement had sold off two units with a combined capacity of 4.8 million tonnes in Gujarat to the Aditya Birla Group’s cement firm UltraTech.
VCCircle had first reported in January that Jaiprakash Associates, the third-largest cement maker in the country, is looking to sell off more units as the debt laden group goes about balancing its books.
Jaiprakash Associates said its board has approved a share purchase agreement with Dalmia Cement (Bharat) for selling 98.9 million shares of JV Bokaro Jaypee Cement Ltd (BoJCL). The consideration for the transaction works out to be around Rs 69.74 per share, it added.
BoJCL has a 2.1 MTPA capacity cement plant at Bokaro in Jharkhand. It recorded revenues of Rs 627 crore for the year ended March 31, 2013 against Rs 272 crore in the previous year. The firm churned out net profit of Rs 136 crore last year. As of March 31, 2013, it had total borrowings of Rs 277 crore.
Based on the enterprise value, the deal has been struck at around Rs 5,476 or around $90/tonne.
Jaypee group also has a separate JV with SAIL in Bhilai, incorporating a 2.2 MTPA cement unit.
For Dalmia Cement (Bharat), this comes as yet another acquisition in the eastern region of the country.
In late 2012, Dalmia Cement (Bharat) signed an agreement to buy Adhunik Cement, a privately held firm based in Kolkata with cement manufacturing units located in Meghalaya, for Rs 560 crore ($105 million then) in multiple tranches. Adhunik Cement has its manufacturing facility in the Jaintia Hills in Meghalaya, and cement is produced by the Adhunik Group’s JV with the MSP Group. The fully integrated cement plant with a capacity of 1.5 million tonnes per annum also operates a 25 MW power plant.
Soon thereafter, Dalmia Cement (Bharat) raised its holding in Kolkata-based Calcom Cement India Ltd for Rs 77.19 crore ($14 million). The firm already held 50 per cent stake in Calcom Cement which it had acquired in January 2012.
Calcom is a manufacturer of OPC and PPC cement and is currently expanding its consolidated cement manufacturing capacity to 2.1 million tonnes per annum.
Dalmia Cement (Bharat) is a subsidiary of the public listed Dalmia Bharat (previously Dalmia Bharat Enterprises). Dalmia Cement, which appointed Mahendra Singhi, former executive director at Shree Cement, as its new CEO with effect from December 9, 2013, counts PE giant KKR as a shareholder. In 2010, KKR had invested Rs 750 crore in an unlisted arm of Dalmia Cement (Bharat) called Avnija Properties.
With this new acquisition, Dalmia Cement’s current installed cement capacity (including subsidiaries and associates) will reach 20 MTPA.
(Edited by Joby Puthuparampil Johnson)