UltraTech Cement, an Aditya Birla Group company, has decided to call off the deal with Jaiprakash Associates to buy two of its cement units in Madhya Pradesh.
The move to acquire the assets on a ‘going concern’ basis was not approved by the Bombay High Court, citing the Mines and Minerals Development Regulation Act, which does not allow transfer of mining rights along with a sold asset.
Earlier this month, global cement giant Lafarge called off a ₹5,000-crore deal to sell 5.1 million tonnes cement capacity at Jojobera and Sonadih in eastern India to Birla Corporation for the same reason.
In a statement on Friday, UltraTech said the court could not sanction the scheme (for acquisition) in the absence of any timeline for amendment or clarification to the MMDRA. Under this circumstance, it was decided to apply for the withdrawal of the scheme filed before the High Court, which gave permission (for withdrawal) on Thursday.
In December 2014, UltraTech signed a deal with Jaiprakash Associates to acquire 2.1 million tonnes per annum (MTPA) cement unit and 2.6 MTPA cement grinding unit at Bela along with 3.1 mtpa clinker and 2.3 mtpa cement grinding unit at Sidhi both in Madhya Pradesh all for an enterprise value of ₹5,400 crore. The deal also included captive power plants for 180 MW.
Selling non-core assets
Debt-ridden Jaiprakash Associates has been in the market to sell its non-core assets that include 20 million tonnes of cement capacity to pare debt and improve its balance sheet.
Due to problems over transferring the mines, Lafarge has now changed strategy and decided to sell the entire 11 million tonnes capacity in India. The decision was triggered by the planned global merger of Lafarge with Holcim, which owns ACC and Ambuja Cement.