Jaypee Development Corporation, privately held arm of infrastructure and real estate major Jaypee Group, has increased its shareholding in Andhra Cements Limited to 68.79 per cent.
It acquired 8.82 per cent stake from the erstwhile promoters of the small cement firm in an off market transfer of shares, as agreed in the share subscription and share purchase agreement signed in 2011, according to a stock market disclosure.
Andhra Cements’ scrip shot up 20 per cent to hit the upper circuit of the day at Rs 7.20 per share on the Bombay Stock Exchange from its previous close amid strong Mumbai market.
As on March 31, 2014, Jaypee Development Corp held 59.97 per cent equity holding in Andhra Cements, while remaining held by public shareholders, stock market data showed.
In November 2011, Jaypee Group signed an agreement to buy majority stake in Andhra Cements through share purchase from the GP Goenka group, a preferential allotment of fresh shares, followed by an open offer. The deal was struck at a share price of Rs 12.
It had spent around Rs 210 crore to buy close to 60 per cent stake. Bulk of it was through the preferential allotment. At the original deal value Jaypee is estimated to have paid around Rs 31 crore.
Andhra Cements is into manufacturing and sale of cements products including ordinary portland cement, portland pozolan cement, portland slag cement and grand granulated blast slag. It sells its products through a network of dealers and agents primarily in Andhra Pradesh, Tamil Nadu, Orissa, and Karnataka.
However, the company’s plants, which have an annual capacity of 1.5 million tonnes, have not been in operations. In the quarter ended December 31, 2013, Andhra Cements posted a net loss of Rs 4.87 crore compared with a net loss of Rs 7.35 crore in the corresponding quarter previous fiscal. It did not have any revenues during the period.
Jaypee Group had previously undertaken asset divestment process, especially in its cement business to cut down its huge debt.
Most recently, KKR-backed Dalmia Cement (Bharat) 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). The total enterprise value of the deal, including debt, is pegged at Rs 1,150 crore.
This marked 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.
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