JP Associates shares surge 38% On UltraTech Cement Deal


Mumbai: Jaiprakash Associates shares surged as much as 37.66 per cent in the morning trade on Tuesday after the debt-ridden Jaypee Group on Monday hiked the sale value of 21.2 million tonne per annum (MTPA) cement assets to Aditya Birla Group firm Ultratech to Rs 16,189 crore. UltraTech Cement will pay an additional Rs 470 crore for completion of 4 MTPA grinding unit in Uttar Pradesh.

Jaiprakash Associates, which for long has been struggling to service its debt because of cash flow issues, has sold most of its power plants over the past two years. The sale of the cement business however had got stuck due to restrictions on mine leasing. At 10.32 am, shares of Jaiprakash Associates were trading 32.38 per cent up at Rs 12.02. The scrip opened at Rs 9.96 and has touched a high and low of Rs 12.50 and Rs 9.80. respectively, in trade so far.

Later, Jaiprakash Associates settled 27.97 per cent down at Rs 11.62. The decision was taken on Monday at the board of directors meeting, convened at a short notice, of the Japyee Group flagship firm Jaiprakash Associates to discuss the progress of divestment plans and other issues. In a BSE filing, Jaiprakash Associates said, “The Board of Directors of Jaiprakash Associates approved an amendments to the Definitive Agreement Dated March 31, 2016 and also the draft Scheme of Arrangement with UltraTech Cement for sale of cement business of Jaiprakash Associates and its wholly owned subsidiary, Jaypee Cement Corporation comprisng identified operating cement plants with an aggregate capacity of 17.20 MTPA. The total enterprise value agreed now is Rs 16,189 crore.”

An additional amount of Rs 470 crore shall be paid by UltraTech Cement for completion of the Grinding Unit under implementation. The Jaypee Group had a consolidated debt of Rs 58,250 crore as of March 2016. Jaiprakash Associates owes over Rs 30,000 crore to a consortium of lenders led by ICICI Bank and the sale of its cement business is very crucial for the promoters to continue in business.

Ultratech Cement and Jaypee said the transaction is subject to the approval of shareholders and creditors, high courts and all other regulatory approvals as may be required and will be consummated within the next 9 to 12 months.
Jaypee Group’s another firm, Jaiprakash Power Ventures settled 10.37 per cent up at Rs 5.64 per cent.