Billionaire Birla Said in Talks for Jaiprakash Cement Assets

Indian billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd. (UTCEM) is in talks to buy cement assets from Jaiprakash Associates Ltd. (JPA), people with knowledge of the matter said.

The two companies are in discussions about projects including Jaiprakash’s Rewa cement-making complex in central India, said the people, who asked not to be named as the talks are private. Rewa has an annual capacity of 7 million tons, according to a May presentation posted on Jaiprakash’s website.

The Rewa complex could be sold for at least 73.5 billion rupees ($1.2 billion), Anubhav Gupta, a Mumbai-based analyst at Kim Eng Securities Pvt, said by phone. Selling additional assets would help Jaiprakash reduce debt that jumped more than fourfold in the five years through March to 611 billion rupees.

“The Rewa unit is a very large and profitable unit,” said Gupta, who has a buy rating on Jaiprakash. If it sells the Rewa complex, Jaiprakash will lose its position as one of India’s top cement producers, he said.

Shares of Jaiprakash rose 3 percent to 88.25 rupees in Mumbai, the highest close since January 2013. UltraTech shares declined 0.2 percent.

Jaiprakash, the builder of India’s only Formula One race track, is also seeking buyers for cement assets in Himachal Pradesh, one of the people said. It owns two factories in the northern Indian state with a combined 3.5 million tons annual production capacity, according to the company presentation.

Gujarat Sale

Askari Zaidi, a spokesman for Jaiprakash, declined to comment in an e-mailed response to questions from Bloomberg News. Pragnya Ram, a spokeswoman for UltraTech, also declined to comment.

UltraTech agreed last year to buy a Jaiprakash cement unit based in Gujarat state for an enterprise value of 38 billion rupees. Jaiprakash deserves a higher valuation for the Rewa complex than the loss-making Gujarat plant, which was sold for the equivalent of $125 per ton, Kim Eng’s Gupta said.

Birla is seeking to purchase more cement plants in India and abroad, he said in an interview with Bloomberg TV India in September.

Jaiprakash sold its 74 percent stake in Bokaro Jaypee Cement Ltd., a joint venture with Steel Authority of India Ltd., to Dalmia Bharat Ltd. for 11.5 billion rupees in March.

After its recent divestments, Jaiprakash has cement making capacity of 26.4 million tons a year, according to the May company presentation. It plans to sell assets valued at about 80 billion rupees by March next year, the presentation showed.

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

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Jason Rogers at jrogers73@bloomberg.net Ben Scent, Sam Nagarajan

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