UltraTech is the biggest cement company operating in India. The company had agreed to acquire Gujarat cement plants of Jaiprakash Associates. The acquisition move would help the builder of the Formula One race track in India pare its debt by 15%.
The Gujarat facilities have a capacity of manufacturing 4.8 million tonnes of cement. Through the acquisition deal, UltraTech's capacity would be strengthened by 9% and would also raise its market shares against rivals who were consolidating operations in India. ET reported the possible deal in its edition last April 23.
The Gujarat unit is a part of Jaypee Cement Corp. The transaction was valued INR3.8 billion including the INR3.6 billion debt that Aditya Birla Group would inherit from Jaypee Cement unit.
Birla said, "Our capacity build-up in Gujarat has been very low. Gujarat has seen a compounded annual growth rate (CAGR) of 11.75 per cent. The deal values the capacity at the Gujarat unit at $124 per ton. The acquisition will also help us supply additional volumes in coastal markets such as Mumbai, Cochin and Mangalore. The company will use debt and internal accruals to fund the transaction."
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