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Birla Said Close to Acquiring Jaiprakash’s Gujarat Cement Unit

Billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd. (UTCEM) is close to buying Jaiprakash Associates (JPA) Ltd.’s Gujarat cement unit for about 37 billion rupees ($564 million), two people with knowledge of the matter said.

A deal may be announced as early as next week, one of the people said, asking not to be identified because the process is confidential. Completing the transaction may take about six months, the person said.

The sale may help Jaiprakash, developer of India’s only Formula One track, cut debt that Chairman Manoj Gaur accumulated to expand the company’s power, sports and construction businesses. Gaur is selling assets to cut costs and reverse a two-year decline in profit, as a cash crunch prompts lenders to raise interest rates for the first time since 2011.

Askari H Zaidi, a spokesman for Jaiprakash, didn’t respond to an e-mail and a call seeking comment. Pragnya Ram, a spokeswoman of the Birla group based in Mumbai declined to comment.

The companies have been in discussions for the 4.8 million ton unit for more than a year, according to people with knowledge of the matter. UltraTech had offered about 43 billion rupees for the Gujarat unit, two people familiar with the process said in November. The valuation has since fallen because of concerns about production at one of Jakprakash’s mines, the people said.

Jaypee Group is seeking to reduce debt by 150 billion rupees by selling its cement plants in southern and western India, some of its power generation units and property, Suren Jain, managing director at Jaiprakash Power Ventures Ltd. (JPVL), said in an interview this month.

Ultratech is in the process of increasing its capacity by another 10 million tons by 2015 to increase its total capacity to 64.45 million tons, according to a July 29 release.

To contact the reporters on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net; Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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