Race for Jaypee-promoted Andhra Cements gathers pace as Edelweiss ARC-led lenders invite EOIs by June 21; rope in Grant Thornton

“This deal is likely to see strong interest from cement firms who don’t have a presence in AP. One can also not rule out southern players keen to further expand their position in the region. The lenders are also open to private equity suitors,” the second individual elaborated. Some of the key southern players include India Cements, Ramky Cements & Sagar Cements.

“The is a lender driven deal being pursued outside the IBC and therefore speed is the real advantage, given the uncertainty around timelines during insolvency proceedings. In this case, the promoters are on the same page as the lenders who are expecting Rs 750 to Rs 800 crore from the proposed sale though the final deal value may vary depending on other factors,” a third individual told Moneycontrol.

As of March 30, 2021, the total debt of Andhra Cements was around Rs 960 crores, the third individual added.  Other lenders in the consortium include Union Bank of India, Karur Vysya Bank and SBI.

All the three individuals above spoke to Moneycontrol on the condition of anonymity.

Moneycontrol is awaiting responses to email queries sent to Jaypee Group, Edelweiss ARC, Grant Thornton and the prospective suitors and has sent reminders. This article will be updated as soon as we hear from them.

The combined grinding capacity of the two cement plants of Andhra Cement ( located at Guntur & Vishakhapatnam) is 2.6 million tonnes per annum ( mtpa) with integrated limestone mines and captive power capacity of 30 MW.  The firm, in which the promoters Jaypee Group owns 68.79 per cent stake, operates with more than 700 authorized stockists across AP & Telangana for delivery of material to customers.

CEMENT SECTOR: RIPE FOR DEALS?

The cement sector has witnessed considerable action in the m&a and IPO segments in the last two years. The Nirma group acquired the cement assets of Emami Group via its arm Nuvoco Vistas in February 2020 for Rs 5,500 crores. In May 2021, Nuvoco Vistas filed papers with Sebi for a Rs 5,000 crore IPO. Southern peer Penna Cement also filed its DRHP ( draft red herring prospectus) with Sebi in the same month to raise Rs 1,550 crores through a listing.

Then, on May 26, Anjani Portland Cement, a subsidiary of Chettinad Cement Corporation acquired a controlling stake in  Bhavya Cement which has a 1.4 mtpa integrated plant at Tangeda, AP. Diversified conglomerate Adani Group has also made a foray into the cement business and plans to set up a 5mtpa plant in Maharashtra. It recently incorporated a wholly-owned subsidiary, namely, Adani Cement Industries Ltd.