NEW DELHI (Reuters) - UltraTech Cement has scrapped plans to buy two of Jaiprakash Associates' cement plants in central India after a court said the deal could not be allowed under current regulations.
UltraTech, part of the Aditya Birla conglomerate, had sought the Bombay High Court's approval for the deal signed in December 2014 but delayed pending clarity whether mining rights can be transferred as part of the transaction.
Companies buying cement plants typically seek limestone reserves -- a major raw material for cement -- as part of the deal, but UltraTech has been stymied by a change to the nation's mining law in January last year.
The Bombay High Court said that amendments to Indian mining and mineral laws mean that only the transfer of mines granted through an auction process could be approved, making the Jaiprakash deal impossible, UltraTech said on Friday.
"Under the circumstances, it was decided to apply for withdrawal of the Scheme (of Arrangement) filed before the High Court," Ultratech said in a regulatory filing.
Jaiprakash, which has interests in roads, property and is best-known as the builder of India's Formula One racing track, has been trying to sell its cement business to reduce debt that has weighed heavily on its balance sheet and to placate banks, in common with many Indian infrastructure businesses.
The company's total debt was 612.9 billion rupees ($8.93 billion) at the end of March.
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The company is also trying to sell its wider cement business, sources told Reuters this month, in a deal likely to be worth about $3 billion, which equates to the total debt linked to the cement operations.
($1 = 68.6350 rupees)
(Reporting by Tommy Wilkes; Editing by David Goodman)