Orient Cement today said it will acquire two cement plants of debt-laden JP Group for Rs 1,950 crore in an all-cash deal, a move that will help the CK Birla Group firm enter central and eastern regions of the country.
Orient Cement said it will acquire Jaiprakash Associates (JAL) 74 per cent stake in Bhilai Jaypee Cement Ltd (BJCL) for an enterprise value of Rs 1,450 crore, which is on a cash free, debt-free basis and is subject to adjustments on account of working capital, if any, it said in a statement.
Besides, the company also inked a deal to acquire Nigrie Cement Grinding unit from Jaiprakash Power Ventures Ltd (JPVL) for an enterprise value of Rs 500 crore that is also on a cash free, debt-free basis and is subject to adjustments on account of working capital, if any, it added.
BJCL, a Joint Venture between JAL and steel giant SAIL, has an integrated PSC cement capacity of 2.2 million tonnes per annum (MTPA) consisting of a clinkerisation unit in Satna Madhya Pradesh and a grinding unit in Bhilai, Chhattisgarh.
While, Nigrie unit in Singrauli, Madhya Pradesh, is a cement grinding unit with a capacity of 2 MTPA and is located very close to the end markets in Bihar, Jharkhand and Eastern Uttar Pradesh (UP).
BJCL’s acquisition will provide the firm with high quality assets taking its total capacity from 8 MTPA to 10.2 MTPA and will provide entry into the high growth central and eastern regions, Orient Cement said.
The company will also benefit from BJCL’s access to limestone reserves and other raw materials including slag, it added.
Whereas, acquisition of the Nigrie unit provides Orient Cement with a high quality asset at strategically well located region. The operational asset provides a ready to market capacity for Orient Cement and also complements its asset portfolio, post the transaction, it said.
Commenting on BJCL’s acquisition, CK Birla Group Chairman CK Birla said: “The current proposal to acquire BJCL from JAL is a significant step towards accomplishing our current mission of reaching a capacity of 15 MTPA by 2020.”
The assets proposed to be acquired will also add a new and strong dimension towards diversifying the firm’s market reach and helping Orient Cement to further sweat its existing assets, he added.
Orient Cement CEO and Managing Director Deepak Khetrapal said: “Nigrie grinding unit is a very good fit for our expansion and market-diversification strategy.
“Its close proximity to growing markets and availability of power, fly-ash and infrastructure of the adjoining super thermal power plant of JPVL provides us an opportunity to reach these markets very efficiently.”
Moelis & Company is the financial advisor, while Cyril Amarchand Mangaldas is the legal counsel to Orient Cement for both the deals.
At present, the firm has 8 MTPA capacity across three units in states of Telangana, Maharashtra and Karnataka.