JPA unloading assets to pay debts

JPA unloading assets to pay debts

Jaiprakash Associates (JPA), India's third largest cement maker, with a capacity of 33.3 million tonnes, is in talks to sell its 74 per cent stake in two cement joint ventures with India's largest steel maker SAIL to the Holcim-owned Associated Cement Companies. The company will let go the Bhilai Cement and Bokaro Cement plants with a total capacity of about 4 million tonnes in this deal. SAIL will hold on to its 26 per cent stake and continue to supply slag to the new buyer for 30 years under the joint venture agreement.

The Rs 2,900 crore deal will help the company to ease some of the burden from a consolidated debt of RS 60,000 crore. JPA is planning to trim its debt by a fourth before the end of the current fiscal year.

Sources indicate that apart from Holchim, Dalmia Cement Bharat too, is interested in this deal. Dalmia has an American private equity fund KKR is an investor. JPA is also said to be in discussions to sell two hydropower projects in Himachal Pradesh to a consortium led by Taqa, Abu Dhabi's flagship energy and utilities company, for Rs 12,000-13,000 crore. The acquisition of the two cement units will help ACC consolidate its installed capacity to about 30 million tonnes.

JPA started selling its assets in September last year with the disposal of two cement plants in Gujarat with a combined capacity of 4.8 million tones, to UltraTech of the Aditya Birla group for Rs 3,800 crore. The company also did away with land parcels in Noida in Uttar Pradesh raising Rs 1,500 crore. "The company intends to reduce its consolidated debt by Rs 15,000 crore in the current financial year through monetisation of land, cement, thermal and hydro assets,'' JPA Executive Chairman Manoj Gaur said, announcing the sale of the cement units in September.

Several Indian conglomerates in infrastructure businesses are trying to cut down debts by selling some of their assets. Such groups include GMR Group, Lanco Group, along with the Jaypee Group. UltraTech is reportedly scouting cement assets in the northern and eastern states.

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