UltraTech acquires Jaypee Cement’s Gujarat cement unit

UltraTech Cement, an Aditya Birla Group Company, to acquire the Gujarat unit of 4.8-million tonne per annum (mtpa) of Jaypee Cement Corporation in Gujarat.The Board of Directors of UltraTech Cement approved the acquisition of the Gujarat Cement Unit of Jaypee Cement, by way of a demerger, comprising of an integrated cement unit at Sewagram and grinding unit at Wanakbori. Jaypee Cement is a wholly-owned subsidiary of Jaiprakash Associates.Commenting on the acquisition Kumar Mangalam Birla, Chairman, UltraTech Cement, said, "With this acquisition of 4.8-mtpa (unit) the company's current capacity increases to 59 mtpa. With projects underway, it will stand raised to 70 mtpa by 2015. Despite the prevailing muted growth of the industry, we believe the long term fundamentals and growth prospects remain intact. We will add more capacities in coming years."“The enterprise value is Rs 3,800 crore besides the actual net working capital at closing. UltraTech will take over all the assets and the liabilities of the unit at closing and the net amount of enterprise value less liabilities taken over will be the consideration. Such consideration will be discharged by allotment of equity shares of UltraTech to the shareholders of Jaypee Cement, subject to a maximum value of such equity shares to be Rs 150 crore,” the company informed.The combined capacity of both the divisions of the Gujarat unit is 4.8-mtpa of cement with 57.5 MW coal-based thermal power plant, limestone reserves for over 90 years at current capacity and a captive Jetty at Sewagram.O. P. Puranmalka, Whole-time Director of the company said, "Besides giving us a stronger production base in Gujarat to serve the local market, it will also bolster our coastal footprint enabling us to cater to other regions of India and exports.""The transaction will also help us realise logistics gains and be value accretive in the medium term," adds Kailash Birla, the CFO of UltraTech.

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