Speaking to CNBC-TV18 soon after the announcement of the deal, Gaur said that the UltraTech's acquisition of its Gujarat plant is only a part of the company's debt reduction plan.
"At this moment, with the Gujarat deal now concluded, we will have to consummate the transition over a period of next 4-6 months after obtaining due approvals from court and other agencies," adds Gaur.
However, Gaur adds that the company might not have been in a position to pare its debt had the economy not seen such a slump.
"Maybe if the economy had been 8 percent, we would not have to diverse our investment plan. All this is happening because of the contrast in economy," he explains.
UltraTech Cement today announced the acquisition of the Gujarat Cement Unit of Jaypee Cement Corp Ltd. Gujarat Cement Unit comprises of an integrated cement unit at Sewagram and grinding unit at Wankbori, the company said in a statement.
Below is the edited transcript of Gaur's interview to CNBC-TV18.
Q: You have been giving us clarity on what the visibility looks like as far your debt reduction is concerned. Take us through what you intend doing in order to being down your debt by Rs 15000 crore. One announcement has come in this evening, what more can we expect and how soon can we expect it?
A: As an organisation, we continue to pursue our corporate plan of debt reduction for the financial year. I am very happy to say that the first result is in front of us. I want to congratulate Ultratech and their chairman Birla who has reinforced his faith in India's cement market and also in the quality assets which JP built at Gujarat.
Out of about Rs 23000 crore debt which JAL has, that includes its 100 percent subsidiary which including JP Cement Corporation Limited, there would be about 15 percent debt reduction by way of this deal.
At a group level, I will like to say that the power debt should be kept out of the ambit because the power debt is taken care by the tariff of each of the project irrespective of whether it is hydro or thermal. JP since 2003 has been running hydro power project and has demonstrated how the business model of hydro power plant in India is sustainable.
Today there is lot of interest for hydro because of obvious problems of fuel and other logistics in thermal.
At this moment, with the Gujarat deal now concluded, we will have to consummate the transition over a period of next 4-6 months after obtaining due approvals from court and other agencies.
We are also working on one or two more options. When the times are tough we have to take actions accordingly and we are not thinking whether it is only cement or not.
Q: Negotiations as far as the Gujarat plant are concerned have been going on and you have admitted and Birla has admitted for almost little over a year now – do you believe if the economy hadn’t slow down as considerably as it has and if the rupee was not where it is today, you would perhaps been able to extract a better valuation for yourself because I understand that several other negotiations for this very same plant were talking between USD 155-160 per tonne and this deal has been done at USD 124 per tonne?
A: This dollar pattern valuation is confusing in Indian context, especially with what has happened to the rupee over last one year in general and specially in the last two months. So in every geography will have different valuations. We should not get confused with what happened 6 years back, USD 200, what was the rupee to dollar, what was the economy.
Q: But if the economy had still been growing at 8 percent do you believe you would have been able to extract better value today?
A: Definitely. Maybe if the economy had been 8 percent, we would not have to diverse our investment plan. One can see what capacity addition JP did 2006 onwards, what power portfolio it has added in last seven years. All this is happening because of the contrast in economy.