Aditya Birla group controlled Ultratech Cement has rowed back from its promise to buy a cement plant from the debt laden Jaiprakash Associates Ltd (JAL), dealing a blow to banks expecting to recover Rs 1,000 crore from the sale.
The UP-based 3 million tonne plant was part of the Rs 16,189 crore acquisition of six integrated cement plants and five grinding units with a capacity of 21.2 million tonnes of the Jaypee Group by Ultratech, which was completed in 2017. These acquisitions were part of a banks-led restructuring plan for the Jaypee Group.
"This lone plant was valued at Rs 1,000 crore but there were certain environmental clearances which were pending. As a result, both companies had agreed for June 30, 2022, as the final date for the payment to be made regardless of the clearances. Ultratech has now informed that it is not willing to make the payment in the present circumstances and is seeking a lower valuation of Rs 620 crore," said a person familiar with the case. The plant does not have the required clearances yet.
A JAL spokesperson said Ultratech is under obligation of to redeem the preferential shares issued to the company by paying, Rs 1,000 crore as this deal with cement assets was valued at that amount.
"Requisite safeguards to protect the interest of JAL are there as the entire transaction of sale of substantial cement business of JAL in favour of Ultratech was consummated under the direction and supervision of lenders of JAL in June, 2017," the spokesperson said.
The shares were issued by JAL in favour of Ultratech with an understanding that it will be executed after paying Rs 1,000 cr. "The plant has since 2017 been operated by Ultratech, but legally it’s still part of JAL since the transfer of shares has not happened. From JAL's point of view, either Ultratech pays Rs 1,000 crore and executes the transfer or returns the plant back to JAL," said a second person aware of the situation.
