Coal news and updates

Jaiprakash to sell Jaypee Bhilai plant stake to Shree Cement

In an attempt to service its Rs 40,000-crore debt, engineering and cement manufacturer Jaiprakash Associates (JAL) has signed an agreement with Shree Cement to divest its stake in the 2.1-million tonne Bhilai Jaypee Cement for an enterprise (BJCL) value of Rs 2,100-2,200 crore.

Jaiprakash Associate is finding it difficult to service its debt due to various reasons, including a slowdown in the economy and some of its projects falling on the revenue front. In 2014, JAL had signed an MoU to sell the plant to Shree Cement but the deal did not materialize.

A senior banker said JAL has agreed to divest its 74% stake in the joint venture with SAIL as financial pres sure has increased. Jaypee Cement has loans of Rs 600 crore and is expected to realize a net value of around Rs 1,600 crore, after adjusting the debt. Of this, JAL is expected to net around Rs 1,200 crore, which will be used for paring its loans from banks. BJCL reported a 12% drop in revenue at Rs 615 crore and a loss of Rs 20 crore in 2014-15.

Shree Cement has refused to comment on the deal. Sources, however, said Shree Cement has shown interest in buying SAIL's 26% stake in the company . When contacted, JAL refused to comment, terming it a "market rumour". However, bankers are pushing JAL to divest a substantial portion of its cement and power generation assets to reduce its debt. The company is the third largest cement manufacturer in the country with a capacity of around 33 million tonne.

Source: TOI