Jaypee, Birla cement deal in last lap

Last Updated: Fri, Dec 07, 2012 21:01 hrs

pTalks between the Jaypee Group and the Aditya Birla Group for sale of the former&rsquos cement units in Gujarat have reached the last lap and a decision is expected any time according to a source directly involvedppThe deal if it fructifies will result in the Birlas paying close to 800 million or Rs 4357 crore for the units and help Jaypee Group retire its debt the source saidppThe talks are centred around final valuation of the unit &ldquoThere is an issue over the valuation of the units from the Birlas&rsquo side who think the units are expensive The Birlas are negotiating hard and have made the final offer&rdquo the source saidppThe Birlas have offered close to 160 a tonne of capacity and Jaypee and its bankers are going through the offer The earlier deal in the industry between Holcim and ACC was signed at an acquisition price of 200 a tonne of capacityppWhen contacted Manoj Gaur executive chairman & CEO of Jaiprakash Associates confirmed the units&rsquo sale plans were on but declined to give details O P Puranmalka whole-time director of UltraTech Cement an Aditya Birla group company said no takeover talks were on with the Jaypee Group for the Gujarat unitsppHowever based on cement units&rsquo sale reports the shares of Jaiprakash Associates have already gone up 100 per cent this year-to-date to Rs 105 a share on the Bombay Stock Exchange The company was earlier talking to the CRH group of Ireland to sell the cement units but the deal fell through over valuation reports The talks to sell the Gujarat units with the Birlas was re-started after the negotiations failed to make any headway early this year over valuationppAccording to analysts sale of the units is very important for the Jaypee Group as it will help it to retire its huge pile of consolidated debt worth over Rs 50000 crore which is a cause of concern for its bankers The deal will help the Birlas to raise its capacity in the crucial Gujarat marketppJaypee&rsquos cement units in Gujarat consist of a clinker plant and a grinding plant in Kutch with the capacity to produce 48 million tonnes per annum This will add to UltraTechs 22 cement plants in India with an installed capacity of 52 million tonnes per annum It wants to add another 10 million tonnes per annum capacity by investing close to Rs 12000 croreppUltraTech&rsquos stock is also up by 69 per cent this year-to-date to Rs 1957 a share fuelled mainly by a construction boom in the countryppThe consolidation of the Indian cement sector has resulted in two players ACC-Holcim owned by Holcim of Switzerland and UltraTech controlling a sizeable chunk of the marketppWith the B K Birla cement units of Century Textiles also coming into his grandson Kumar Mangalam Birlas fold analysts say UltraTech will retain its pole position in the industryp

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