Adani Group eyes Jaypee Group's cement assets amid insolvency proceedings

Adani Group's cement arm, which includes ACC and Ambuja Cement holding, is India's second-largest cement producer

The Adani Group is strategising to acquire the Jaypee Group’s cement assets, which boast over 9 million tonnes per annum (mtpa) capacity, according to a report by Moneycontrol. This potential acquisition comes as lenders initiated insolvency and bankruptcy proceedings against Jaiprakash Associates Ltd (JAL) in early June.

The Adani Group, currently ranks as India’s second-largest cement producer following its acquisition of ACC and Ambuja Cement. Led by Gautam Adani, the group has been actively growing its cement arm, with the goal of capturing one-fifth or 20 per cent of the Indian cement market by the financial year 2027-28.

Insolvency proceedings and potential acquisition

On June 3, the National Company Law Tribunal (NCLT) in Allahabad admitted Jaiprakash Associates Ltd for corporate insolvency. This decision came after ICICI Bank filed an application in September 2018 for debt resolution under the Insolvency and Bankruptcy Code, 2016. The State Bank of India (SBI) also moved against JAL, claiming a total default of Rs 6,893.15 crore as of September 15, 2022.

 

According to Moneycontrol, the insolvency proceedings, which were stagnant for nearly six years, have created an opportunity for Adani to acquire Jaiprakash’s cement and associated assets, including limestone mines and a power plant. Although plans are being developed, it is important to note that the bankruptcy proceedings are still in the early stages. The committee of creditors has only met once, on June 29, and no formal sale process has been initiated.

Jaiprakash’s cement assets draw bidders

Jaiprakash Associates has been selling its cement plants to reduce debt, with a significant portion of its cement business previously acquired by UltraTech in 2016 for over Rs 16,000 crore, adding 22.4 mtpa capacity to UltraTech’s portfolio. The remaining units retained by the debt-ridden group are now being eyed by the Adani Group.
 

In May 2024, Jaiprakash Associates defaulted on loans worth Rs 4,616 crore, comprising a principal amount of Rs 1,751 crore and interest of Rs 2,865 crore. This default underscores the urgency of the ongoing insolvency proceedings and the potential for asset acquisition.

The potential acquisition is expected to intensify competition in the rapidly consolidating cement industry. Major players like UltraTech, Adani, Dalmia, and JSW Cement are actively seeking assets across the country.