JP Associates' shares shoot with the Ultratech deal

Aditya Birla Group promoted, Ultratech Cement announced purchase of Jaiprakash Associates’ 17.2 million tonnes per annum (mtpa) capacity cement plant worth an enterprise value of Rs 16,189 crore. The agreement is signed between Ultratech and wholly owned subsidiary of Jaiprakash Associates, Jaypee Cement Corporation Limited.

The deal is likely to take Ultratech’s cement capacity from 68 mtpa to 91 mtpa. On the other hand it will help Jaypee reduce its debt which includes defaulted bank loans, interest payments and statutory payment worth Rs 4539 crores.
The deal could help both the companies to stand erect in the northern regions which is still dominated by the peers ACC, Ambuja and Shree.

Earlier, in the last week, BSE had sought clarification from Ultratech Cement regarding the same deal agreed upon at Rs 15900 crore.

The acquisition was proposed on March 31, 2016 of the identified cement plants on a slump exchange basis in Madhya Pradesh, Uttar Pradesh, Andhra Pradesh with 21.20 mtpa. Accordingly, on July 4, the board of directors, with the consent of shareholders and creditors approved the acquisition.

The 470 crore, 4 mtpa unit in UP was added in February's agreement. The unit is still under construction and payment would be done on completion. The March proposal revision had excluded 1.2 million tonne plant in Karnataka.

The stock of JP Associates has soared 22 per cent at Rs 11.10 while Ultratech is trading at Rs 3416 with 0.2 per cent gains.