Cement sector giant Dalmia Bharat has entered into a deal to buy cement, clinker and power plants of Jaiprakash Associates (JP Associates). This binding framework agreement is worth about Rs 5666 crore. The company has given this information in the exchange filing. According to the information given to the stock markets, under this deal, Dalmia Bharat will buy 9.4 million tonne cement capacity plant, 6.7 million tonne clinker capacity plant and 280 MW thermal power plant. All these plants are in Madhya Pradesh, Uttar Pradesh and Chhattisgarh.
Why is Dalmia Bharat making this purchase?
The deal will see Dalmia Bharat expand to central India. Apart from this, the company will help in meeting the target of a cement company with a capacity of 75 million tonnes by FY2027 and 11-130 million tonnes by FY2031 at the national level. After the transaction, 10 per cent capacity share of the Central India market will go to Dalmia Bharat. Central India accounts for 15 per cent of the country’s cement demand and are expected to grow at a CAGR (compound annual growth rate) of 7 per cent in the medium term, according to a company presentation.
Why JP Associates is selling its plants
In October, CNBC-TV18 had reported that Jaypee Associates was preparing to sell its plants to repay the loan and was in talks with a large conglomerate for the same. As per the data available as of October 2022, Jaypee Associates had a debt of Rs 28,648 crore. The deal is beneficial for Jaypee Associates in that SBI will not drag it to NCLT over the loan. Jaypee Associates and Jaypee Power Ventures had approved their disinvestment plan in October.
What was the effect of the deal on the shares?
Shares of Dalmia Bharat today closed at Rs 1905.70 (Dalmia Bharat Share Price) on BSE with a gain of 3.30 per cent on December 12. In intra-day it had reached a height of Rs 1922.95. JP Associates remained in the upper circuit at Rs 11.74 (Jaiprakash Associates Share Price) throughout the day and JP Power also closed at Rs 8.30 (JP Power Share Price) with a jump of 9.93 per cent.
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