Jaiprakash Associates rally over 2% on debt reduction plans

NEW DELHI: Jaipakash Associates Ltd rose a little over 2 per cent in trade on Monday, after media reports suggested that Jaypee Group is in talks with Heidelberg Cement, and Sajjan Jindal-led JSW Cement, to form a joint venture which will control the majority of its cement plants as part of an ongoing exercise to reduce debt.

At 09:40 a.m.; Jaiprakash Associates was trading 1.8 per cent higher at Rs 27.30. It hit a low of Rs 26.85 and a high of Rs 27.35 in trade today.

The plan envisages a separate joint venture entity which will house around 20-22 million tonnes (MT) of Jaypee's operational units spread across Uttar Pradesh, Himachal, Uttarakhand, Andhra Pradesh, Chattisgarh and a new greenfield unit in Karnataka, which is expected to come on stream this year, said multiple sources in the know, ET reported.

Jaypee is open to becoming a junior partner in the proposed venture with a 49% shareholding but may even go down to 40% thereby ceding management control and a majority stake, added the report.

As per the report, the rationale behind the exercise, said the people cited above, is to significantly bring down Jaypee's consolidated group net debt in one shot.

The Delhi-based conglomerate's debt level, Rs 70,000 crore as of 31 March 2014, is still considered high even after a spate of asset sales from its cement, real estate and power portfolio. In cement alone, Jaypee has sold assets worth Rs 10,000 crore.