Comments
Aditya Birla Group firm Ultratech’s nearly Rs 3,800 crore deal with Jaypee Cement Corporation to acquire its facilities in Gujarat, has received approval of fair trade watchdog CCI that ruled the transaction does not raise unfair competition concerns.
As per the deal, Ultratech, a leading manufacturer of cement in India, will acquire Jaypee’s cement unit in Gujarat comprising an integrated cement plant at Sewagram, limestone reserves, captive power plant and mining leases, among others.
In an order released today, the Competition Commission of India (CCI) said “it is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India”.
The Commission in its order has observed that ABG Cement and Lafarge India were likely to set up cement plants in the state of Gujarat and Rajasthan respectively.
According to CCI “entry of new firms is generally considered to counterbalance any attempt by the merging parties or their competitors to profit from the potential reduction in competition brought about by the merger”.
“The new entrant, if of sufficient size, effectively disciplines the existing market participants, as size of the new entrant does matter in the markets characterised by few players,” the regulator said.
Among others, the CCI also observed from Ultratech’s submissions that it intends to introduce and “utilise its processes and core competence to increase the capacity utilisation of Jaypee’s assets thereby increasing overall economic efficiency in production and increase the overall quantity of cement in the market for grey cement”.
“It has also been stated that the location of the target (Jaypee) assets will reduce lead time to customers,” it added.
The deal which was executed in September this year, has been pegged as one of the largest M&A deals in recent time and will further cement UltraTech’s numero uno position in the market and give it an entry into Gujarat.
For the Jaypee Group, it will help pare a portion of its Rs 55,000 crore debt.
The companies had approached CCI in October seeking the regulator’s clearance on the deal.
As part of its process in this case, the Commission had also sought certain information from Ambuja Cements Ltd, ABG Cement Ltd and Lafarge India relating to their cement plants in Gujarat and Rajasthan.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.