The Competition Commission of India (CCI) has approved a ₹5,666 crore deal related to Dalmia Cement’s acquisition of cement, clinker and power plants of Jaiprakash Associates Limited (JAL).

The acquisition will enable New Delhi-headquartered Dalmia Cement to expand its footprint into the central India region and emerge as a pan-India company with 75 million tonnes capacity by FY27 and 110-130 million tonnes by FY31. More than 50 per cent of Jaypee Group’s cement capacity is located in central India.

This latest transaction, once approved by all regulators, would see the complete exit of Jaiprakash Associates from the cement business.

Dalmia Cements is a wholly owned subsidiary of Dalmia Bharat Limited (DBL) which has been in business of the manufacture and sale of cement for over 80 years. DBL is the ultimate parent entity of the Dalmia Bharat Group.

JAL is engaged in the manufacture and sale of clinker in India, manufacture and sale of grey cement primarily in the States of Madhya Pradesh, Uttar Pradesh, Chhattisgarh and (coal-based) thermal power generation primarily for captive consumption purposes in India. The plants that are being sold under this deal are situated at Madhya Pradesh, Uttar Pradesh, and Chhattisgarh.

In December last year, Dalmia Bharat through its wholly-owned subsidiary Dalmia Cement entered into a binding framework agreement to acquire the entities for an aggregate enterprise value of ₹5,666 crore. The agreement covered divestment of the cement, clinker and power plants having aggregate cement capacity of 9.4 mtpa, along with clinker capacity of 6.7 mtpa and thermal power plants of aggregate capacity of 280 MW. 

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JAL had decided to exit from cement business completely and use the proceeds to repay the loans of lenders and concentrate in its other core areas of working.

Reducing debt

JAL had in the recent decade been taking steps to reduce its debt and repay to lenders and meet its commitments on a pro-active basis. It had divested over 20 mtpa cement capacity favouring UltraTech Cement Limited during 2014 and 2017, while selling its controlling stake of more than 2 mtpa capacity to Dalmia Group in 2015.

To fulfill the commitment to reduce its debt, the Group has already divested its various cement and power plants to other leading industrial groups. 

Back in October last year, JAL and Jaiprakash Power Ventures had announced plans to divest their cement business as well as some non-core assets to reduce debt.