Consolidation is accelerating in the cement sector; JSW and Adani will buy smaller units
Consolidation in the cement sector has accelerated, with JSW Cement closing in on India Cements’ Madhya Pradesh unit and Adani Group set to buy Jaypee’s cement units.
Banking sources said JSW Group was also set to acquire India Cements’ Rajasthan unit and edged out Ultratech by making a better offer.
With this, the Indian cement industry is expected to consolidate, with several smaller companies being taken over by the three major players. UltraTech had earlier acquired Jaypee’s cement business, but few units were still hosted by Jaypee Group, which are now sold to Adani Group.
Jaypee Group Company – Jaiprakash Associates cleared the sale during a board meeting held earlier on Monday. Shares of Jaiprakash Associates rose 5% in morning trading.
The acquisition bolsters Adani’s plans to become India’s leading cement player by 2030. The group aims to increase capacity from 70 mtpa (million tonnes per annum) to 140 mtpa by 2030. Rival Ultratech has also announced the increase of its capacity from 120 mtpa to 160 mtpa. mtpa at the same time.
The Jaypee Group, including its subsidiary, JPVL (Jaiprakash Power Ventures Ltd), currently has an installed cement capacity of 10.55 mtpy and 339 MW (megawatt) of captive power.
Implementation of the 1.20 million tonne Shahbad cement plant expansion in Jaypee has been put on hold.
On the other hand, JSW Cement, which had made an offer of 7 billion dollars for Ambuja Cements, is buying back the shares of India Cements.
India Cements began work on a three mtpa plant in Madhya Pradesh last year with the acquisition of land. The project also has backward links with limestone, an essential raw material for the manufacture of cement.
In May, India Cements indicated that it was ready to sell part of its land to reduce its debt. As of March 31, 2022, India Cements had a net debt of Rs 3,039 crore. This is an increase of 1.43% from the previous year, when net debt stood at Rs 2,996 crore.
Spokespersons for JSW Group and Adani did not respond. Trade standard’the requests.