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Jaiprakash Associates to sell its Gujarat cement units to UltraTech at lower valuation

28 Aug 2013 Evaluate

After months of negotiations, Jaiprakash Associates is close to selling its Gujarat-based cement units to UltraTech Cement at a far lower valuation than what it sought earlier this year. Reports suggest that the company is likely to sell the cement units at a valuation of $130 a tonne, compared to $160 a tonne sought earlier, which would fetch Jaiprakash, a total valuation of Rs 4,000 crore. The company plans to utilize these funds to cut down its debt, which is around Rs 24,337 crore.

Of the total debt, ICICI Bank, State Bank of India and IDBI Bank have the highest exposure and are nudging the company to sell its cement units to cut debt. Further, apart from rising debt, Jaypee is gearing up to sell its cement units as costs are going up quite substantially for cement companies.

Jaiprakash Associates, in last year, divested its cement units in Gujarat and Andhra Pradesh into a separate company, Jaypee Cement, in order to monetize a part of its investments to help the parent company reduce its debt. Jaypee group’s cement division currently operates modern, computerized process control cement plants with an aggregate capacity of 21.3 MTPA.

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