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UltraTech-JAL deal hits roadblock; India, Cyprus to sign tax treaty

01 July, 2016

UltraTech Cement Ltd’s Rs 15,900 crore deal with debt-laden Jaiprakash Associates Ltd (JAL) for buying its cement assets has run into trouble as Jaypee Group failed to meet certain transaction commitments.

Jaypee Group has not met some financial commitments including clearing statutory dues and providing necessary working capital for the plants under review, Mint reported, citing two sources with direct knowledge of the matter.

Also, ICICI Bank has invoked Strategic Debt Restructuring (SDR) on JAL at the joint lenders forum as its deal with UltraTech has hit a roadblock, The Economic Times reported citing sources privy with development. The joint lender forum has three months to approve or reject SDR from the date of invoking it.

According to the report, UltraTech started negotiations for a mark down in valuation with JAL following the amendments in Mines and Minerals Development and Regulation Act. JAL and lending banks are not happy with this development and as a result the deal is stalled.  

The report said JAL and banks have approached other suitors, JSW Group and KKR, to negotiate a possible sale on better terms.

India, Cyprus set to sign tax treaty

India and Cyprus are set to sign a new tax treaty which will prevent the investors from using the country’s tax loopholes to avoid paying taxes in India, Mint reported. The deal, which is similar to the deal with Mauritius, will not only enable Indian authorities to tax capital gains on investments routed through Cyprus, it will also lead to the removal of the Mediterranean island nation from the Indian government’s blacklist. The Mint referred to a statement from the Cyprus Finance Ministry’s website which says India will get the right to tax capital gains from sale of shares on investments made by Cyprus based companies after April 1,2017.

Cochin Shipyard hires SBI Capital-led consortium for IPO

Cochin Shipyard Ltd (CSL), which is building the country’s first indigenous aircraft carrier, has hired a consortium led by SBI Capital Markets Ltd for its initial public offering, Mint reported, citing CSL. The public sector firm plans to raise Rs 600 crore from the IPO for expansion and construction of larger vessels, ship repairs and fabrication.

A CSL spokesperson told the newspaper that the consortium of merchant bankers includes JM Financial Institutional Services Ltd and Edelweiss Financial Services.  

Essar is pushing for outright sale of Gujarat refinery

Essar is in talks with Russian oil company Rosneft for outright sale of its 4,05,000 barrel-per-a-day oil refinery at Vadinar in Gujarat. Last year, Rosneft had signed a preliminary agreement to acquire 49% stake in the refinery.

Essar wants to pare down its debt exposure, which is estimated to be around $14 billion, through the sale of its oil assets. “The final signing of the deal will take some time as Essar has offered 100% to Rosneft,” a source privy to the development told Mint.

According to Essar spokesperson, the parties are in advanced stages of finalising the 49% stake sale and termed outright sale as speculative.

Muthoot Fincorp in talks to raise capital

Muthoot Fincorp is in talks with private equity firms for capital infusion worth around Rs400-500 crore into its micro-finance business vertical to reduce its exposure in gold-related loan disbursal. “We are diversifying as a full-fledged financial services firm,” Thomas John Muthoot, chairman, Muthoot Fincorp, told The Economic Times. Its assets currently stand at Rs 2,100 crore. 

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UltraTech-JAL deal hits roadblock; India, Cyprus to sign tax treaty

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