INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

JAYPEE GROUP ACQUIRES GUJARAT ANJAN CEMENT

 IN YET another consolidation move in the cement industry, the Jaypee group has struck a deal to acquire Gujarat Anjan Cement, which is implementing a 1.2-million cement plant in Kutch, Gujarat. The financial details of the acquisition could not be known. Gujarat Anjan Cement is promoted by the Ahmedabad-based Sumaru group.

Sources said the Gaurs of Jaypee are acquiring the Gujarat company through Jaypee Cement, a Jaypee group company. Part proceeds from the group's recently floated

160 million FCCB (foreign currency convertible bond) issue would be used for funding the acquisition. The Gujarat acquisition will help the Jaypee group get a foothold in the western Indian market. Besides, it would also help the group to get into exports as the Kutch plant will have easy access to ports on the western coast. When contacted, Jaiprakash Associates MD & CEO Manoj Gaur confirmed the acquisition deal.

The group would invest about Rs 400 crore to complete the implementation of the 1.2 million cement plant, which already has a limestone mine. This is the second acquisition by the Jaypee group this year, the first being the Rs 459-crore takeover of the assets of the 2.5 million tonnes UP State Cement Corporation plant in a hotly contested bid in January.

 In a related development, the group has also decided to set up a 1.5-million green field cement project at Sidhi near Rewa, Madhya Pradesh. The project, expected to be commissioned by end ‘07, is estimated to cost about Rs 400 crore. The acquisition of Gujarat Anjan Cement and the new green field project at Sidhi would raise the total cement capacity of the group to 15.2 million tonnes, which is expected to catapult it to the third position from its current 7th position. The group's 3 million tonnes green field cement plant in Himachal Pradesh is expected to go on stream in mid ‘07. This would pave the way for the group's foray into the Up North markets of Punjab, Himachal Pradesh and parts of Haryana and J&K.

Sources said the group is also setting up two municipality solid waste (MSW) processing plants, one in Varanasi and the other in Chandigarh which would produce pellets for its captive power plants at its Himachal and newly acquired UP Cement Corporation plants. Besides, Jaypee would also set up captive power plants at Sidhi and the newly acquired Kutch plant site.

Jaiprakash Associates (JAL), the flagship company of the Jaypee group, has posted a 150% increase in its net profit to touch Rs 70 crore in the quarter ended March 31, ‘06 from Rs 28 crore in the corresponding period of last year. The company's gross revenue has registered an 18% growth during this quarter to Rs 917.30 crore. In the year ended March 31, ‘06, JAL has reported a 203% increase in its net profit to Rs 627 crore from Rs 207 crore in the previous year.