Recently, Cement major Dalmia Bharat has entered into a share purchase agreement with Jaiprakash Associates (JAL) to acquire its cement assets spread across Madhya Pradesh, Chhattisgarh, and Uttar Pradesh with 9.4 million tonnes per annum capacity and other power assets at an EV of Rs 570 crore. This deal is still subject to due diligence, and approvals from lenders and JV partners, but if successfully executed will help Dalmia Bharat towards realisation of its target to be a pan-India cement manufacturer and reach capacity of 75MTPA by FY27 or 110-130MTPA by FY31. The acquisition will expand Dalmia’s capacity footprint to Central India, which is among the fastest growing regions and with a high concentration of capacity ownership. This acquisition if completed should be value accretive to shareholders, in our view, but execution will be key.
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JP Super was awaiting green clearances was identified as part of an earlier sale plan to UltraTech back in 2017. JAL was still executing the project at the time and as per conditions with lenders JP Super was to be completed and transferred the asset to UltraTech by June 2022. If JP Super is part of the identified assets as per the agreement with Dalmia Bharat, then this could give rise to a potential dispute between JAL and UltraTech.
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In BJCL (Bokaro Jaypee Cement) , Dalmia will acquire a 74% stake of JAL. The remainder 26% stake is with JV partner SAIL, which holds limestone mining rights and supplies slag for BJCL. Dalmia would also need to get approval from SAIL on the deal.