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Asian Business News
India's Aditya Birla to Buy Two Cement Plants
From the Wall Street Journal of Tue, 23 Dec 2014 13:51:09 EST

MUMBAI—India’s Aditya Birla Group said on Tuesday that it has agreed to buy two cement plants from a rival in a deal valued at $852 million, as the conglomerate seeks to tap into an expected increase in cement demand to build roads, apartments and offices.

UltraTech Cement Ltd. , the group’s cement unit, said its board approved the acquisition of the plants from Jaiprakash Associates Ltd. in the central Indian state of Madhya Pradesh.

As part of the deal, UltraTech will also buy two power plants that supply power to the cement plants, the company said in a filing to the Bombay Stock Exchange.

With the acquisition, UltraTech’s cement capacity in India would increase from about 60 million tonnes a year to 65 million tonnes a year, the company said. By 2016, capacity would increase to about 71 million tonnes due to expansion projects, the company said.

Aditya Birla Group has said it is looking to increase cement capacity to tap into an expected increase in demand as the Indian economy grows.

India’s gross domestic product grew 5.3% from a year earlier for the three months that ended Sept. 30, according to government data. Though this was down from the 5.7% year-over-year growth posted in the previous quarter, Indian businesses expect a revival in the economy after a nearly three-year slump.

Jaiprakash Associates’ parent, power and construction company Jaypee Group, had a debt of about $10.7 billion as of Sept. 30, a spokeswoman said on Tuesday. In 2013, it sold the Gujarat unit of Jaypee Cement Corp. for about 38 billion rupees ($600 million), including the assumption of debt, to UltraTech.

Jaiprakash Power Ventures Ltd. , the power unit of the group, last month signed a definitive agreement with Mumbai-based power producer JSW Energy Ltd. to sell two hydropower plants for 97 billion rupees. The sale is expected to be completed in the next financial year that starts April 1.

In a separate news release, Jaypee Group said on Tuesday that it expects the sale of the two cement plants to help bring down Jaiprakash Associates’ debt and “improve its balance sheet.”

Write to Kenan Machado at kenan.machado@wsj.com and Saurabh Chaturvedi at Saurabh.Chaturvedi@wsj.com



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