Expect JPA's biz to become EPS accretive by FY19-end

• Jaipraksh Assosiates (JPA) inked the much-awaited sale of its cement assets to UltraTech Cement for Rs 15,900 crore. The deal includes the sale of 9 units across states of Uttar Pradesh (UP), Madhya Pradesh, Himachal Pradesh, Uttarakhand and Haryana and an under-construction grinding unit of 4.0 mtpa at UP.

• UltraTech will also take over Rs 10,900 crore by way of debt from JPA as part of the deal, said Atul Daga, CFO of Ultratech. The deal is expected to be consummated within the next 12-15 months, he said, adding that the company will not enter JPA’s assets before FY17.

• UltraTech is taking over 19.2 million tonnes of operational capacity. An additional 2 million tonne capacity will be commissioned in 12-18 months, Atul Daga said. JPA’s current capacity utilisation is below 50 %.

• Daga commented that the deal gets consummated by April 17 when we take over the assets completely; there will be an improvement program that we will run. The aim is to improve operational efficiency by over 50 percent in a year’s time. Chhattisgarh and eastern Uttar Pradesh markets are extremely lucrative, Daga added.

• The strengthening cement demand across states will boost the growth for the company. The company will become earnings per share (EPS) accretive only by the last quarter of FY19, he said, adding that atleast two years are needed to make the business lucrative. .