Dalmia has executed the business transfer agreement with Jaiprakash Associates and Adani Infra (India) Ltd on 21 May, to buy cement plants located at Rewa (Madhya Pradesh), Churk, Chunar and Sadwa (Uttar Pradesh) with 5.2 million tonnes per annum (MnTPA) cement capacity and 3.3 MnTPA clinker capacity.
The asset also entails 99 MW of thermal power capacity and railway siding at Rewa and Chunar, along with a common railway siding at Churk.
The acquisition will boost Dalmia Bharat’s cement capacity to 54.7 MnTPA. The transaction is expected to be completed within two weeks.
In addition, the on going expansion projects at Belgaum, Pune and Kadapa will further augment the company’s cement capacity to 66.7 MnTPA by third quarter of FY2028, Dalmia said in a statement.
Earlier in December 2022, Dalmia had entered into framework agreement with Jaiprakash Associates (JAL) for sale of business assets along with other relevant agreements in pursuant thereof including a business transfer agreement and cement sale purchase agreement.
These agreements were entered into with a view to, inter alia, settle all disputes with JAL including under the ‘Long-term clinker supply agreement’. However, while the consummation of the same was pending, JAL was admitted to insolvency and the sale could not be completed, Dalmia said.
Post approval of the resolution plan of Adani Group under the IBC framework with respect to JAL, Dalmia requested that the earlier agreement should be considered with a view to settle all pending disputes with JAL and has executed a fresh business transfer agreement.
The acquisition marks a significant milestone in advancing the Company’s vision of becoming a pan India player and represents a key step towards achieving its long-term capacity expansion targets, Dalmia said.
The asset provides faster access to Central markets compared to a greenfield project and further offers expansion opportunity through debottlenecking as well as brownfield approach, it noted.
Considering newer markets, relatively better prices and Dalmia’s proven cost leadership, these assets would augment EBITDA delivery and enhance overall returns for the company, the company added.
“This serves as a great strategic fit for Dalmia. It helps us move forward in our journey to be a pan India player and provide a strong head start to serve the high potential markets in Central region. I am optimistic that the expansion potential of these assets along with close proximity with Dalmia’s captive mines will help us create a capacity hub for the future,” Puneet Dalmia, Managing Director & CEO – Dalmia Bharat, said.