Dalmia, Sagar Cements in race to buy debt-ridden Andhra Cements

Jaypee-owned firm undergoing bankruptcy process

Dalmia Cement (Bharat) and Sagar Cements have emerged as the top contenders to acquire Andhra Cements, which is undergoing bankruptcy process after it failed to repay its debt.
 

Banking sources said both companies have submitted their offers to the resolution professional and the committee of creditors is evaluating both offers. According to statistics submitted to the stock exchanges, Andhra Cements owes Rs 970 crore of debt to its lenders. 
 

The company was acquired by Jaypee group in 2012, but failed to repay its debt after the entire Jaypee group started defaulting on loans since 2016. Andhra Cements — a separate listed entity — has not reported sales for the last two years, blaming high cost operations and lack of working capital (see chart). Sources put the valuation of the debt-ridden firm between Rs 350 and Rs 400 crore.
 

“There are two offers on the table, but we will not be surprised if any new suitor approaches the lenders after Adani's take over of Ambuja and ACC which has started a race to acquire additional capacities," said a banker close to the development.
 

Dalmia Bharat declined to comment. An email to Sagar Cements did not elicit any response. Dalmia Cement operates a manufacturing capacity of 35.9 mtpa across 14 plants in 10 states. Sagar Cements, on the other hand, has a production capacity of 8.25 mtpa spread across Telangana, MP, Andhra and Odisha.
 

Acquiring Andhra Cements will give access to either of the suitors to two manufacturing plants in Andhra Pradesh with a capacity of 2.6 mtpa. The company was also catering to the South Indian markets of Andhra, Telangana, Tamil Nadu, Odisha, and Karnataka.
 

The company was sent to the National Company Law Tribunal (NCLT) for debt resolution in April this year after Pridhvi Asset Reconstruction and Securitisation Company acquired debt from Edelweiss ARC and Karur Vysya Bank in February this year. Pridhvi ARC recalled the debt and started the insolvency process against the company.
 

Jaiprakash Associates is in talks with several suitors to sell its cement capacity of 10.5 mtpa.
 

The company has sold assets worth Rs 30,875 crore to repay lenders since 2017, including power assets to the JSW group and cement assets with 22.4 mtpa capacity to UltraTech Cement. The company still owns another 10.55 mtpa of cement capacity and has put this capacity on sale. 
 

A larger part of Jaypee’s cement business was earlier acquired by Aditya Birla group's UltraTech in a deal worth over Rs 16,000 crore (22.4 million tonnes per annum, or mtpa, capacity) in 2016, and the few units retained by the debt-hit group are now being sold. 

Andhra Cements

Standalone figures in Rs crore

Year End	Networth	Total Debt	Net Sales	PAT
FY17	-64.7	927.0	349.3	-103.1
FY18	-134.7	936.6	466.3	-71.1
FY19	-314.8	959.7	321.2	-180.1
FY20	-480.8	961.4	142.9	-168.3
FY21	-680.3	963.5	0.1	-205.0
FY22	-916.6	970.3	0.0	-236.3

Source Capitaline

Compiled by BS Research Bureau