Jaiprakash in new attempt to sell Gujarat assets, India

Jaiprakash Associates is reportedly planning to sell its Gujarat-based cement units within a few weeks in an effort to reduce debt.

According to reports by the Business Standard of India, the Gujarat cement assets are expected to be sold for INR4000 crore. Earlier, the group was in talks with the Birlas to sell the cement units, however, as its expected valuation of US$170/t was deemed too high, it failed to secure the deal. Sources say the sale is now likely to be carried out at US$150/t.

"According to Jaiprakash Associates, it is in advanced stages for concluding the sale of its entire 100 per cent stake in the 4.8Mta Gujarat capacity for INR4000 crore, implying an enterprise valuation of US$150/t," said a Credit Suisse report dated 11April. "Lack of fund-raising would deteriorate its debt coverage ratios and result in lenders raising its cost of borrowings," it adds.

Last year, Irish building materials major CRH was in line to purchase the Gujarat cement business but talks were terminated as the companies were unable to agree on terms. ??In April 2011, Jaiprakash Associates had de-merged its South-based cement units with a capacity of 5Mta, as well as those in western India (capacity of 4.8Mta) to its wholly-owned subsidiary, Jaypee Cement Corporation, with the intention of part or full stake sale.