Jaiprakash Associates said on Thursday it has received approval from its committee of directors to close the transaction for selling a part of its cement business to Ultratech Cement for `16,189 crore. The proceeds of this transaction will help the company to reduce its debt including repayment of its loans to bankers, part payment to the holders of foreign currency convertible bonds, repayment of all outstanding fixed deposits and other priority payments, it said in a statement. Indian banks including ICICI Bank, Yes Bank and IndusInd Bank had seen their non-performing assets rise significantly in the previous quarter due to exposure to this account. ICICI Bank’s non-performing assets had likely grown by `5,378 crore because of this account. Yes Bank’s net exposure to this account was `683.6 crores, which was 0.52% of their net advances. With this sale, part of the debt of Jaiprakash Associates and Jaypee Cement Corporation has been transferred from a stressed account to a AAA-rated company, ICICI Bank said. “This is the largest asset resolution in the country so far, and I hope that this landmark transaction will pave the way for more such resolutions. It is also heartening to note that this is the largest transaction in India’s cement industry, thus far,” Chanda Kochhar, MD & CEO, ICICI Bank said in a statement. Jaiprakash Associates said its cement plants in Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh has been sold to Ultratech.
Ultratech will pay an additional R470 crores for another under-construction unit in Uttar Pradesh, it added. Post this deal, the group will retain 10.60 MPTA capacity cement plants in Madhya Pradesh, Andhra Pradesh, Uttar Pradesh and Karnataka. The RBI has recently referred 12 large NPAs in the banking system for resolution under the Insolvency and Bankruptcy Code (IBC), based on the recommendations of its internal advisory committee (IAC).