JP ASSOCIATES SELLS 5 CR TREASURY SHARES FOR RS 1,190 CR

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INFRASTRUCTURE major Jaiprakash Associates (JAL) raised around Rs 1,190 crore through sale of 5 crore treasury shares in bulk deals in a bid to finance its proposed captive power plants and keep cash ready for a possible acquisition or setting up of cement capacity in Maharashtra and overseas, a top company executive said.

"The funds raised will be used to finance our proposed 360 MW captive power plants and add more cement capacity,” Jaiprakash Associates executive chairman Manoj Gaur said, adding that the fund will not be used for debt repayment. JAL has a total debt of Rs 9,500 crore and a debt-equity ratio of 1:9 as of now.

The company sold shares at an average price of Rs 238.50 a share. This is the second tranche of treasury share sale by JAL, which sold 2.5 crore shares in June to raise Rs 500 crore. Mr Gaur said the company didn’t plan to sell any more treasury shares in the next three months.

A merger of four subsidiaries with JAL early this year resulted in the formation of around 21 crore treasury shares or 14.5% of the equity base of the combined entity. Treasury shares are those issued to the parent company in lieu of the stake it holds in its subsidiaries.

Mr Gaur said the company was “exploring new opportunities in the cement sector in Maharashtra and overseas.” Mr Gaur declined to comment if he was looking at an acquisition or a greenfield project. The company has in the past held talks with at least one overseas company to takeover a cement plant in Turkey. The talks, held over a year ago, though didn’t lead to a deal. Jaiprakash Associates has an operational cement capacity of 18 million tonnes per annum and aims to have a total capacity of 33 million tonnes in three years. But now, Mr Gaur said, the company has raised its target to 40 million tonnes per annum.

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