Dalmia kicks off Plan B as battle for Jaypee assets heats up
- Dalmia Bharat has begun land acquisition in Rajasthan’s Jaisalmer for a new cement plant even as it competes for Jaiprakash Associates’ assets under insolvency.
- India’s fourth-largest cement producer says the greenfield project will proceed if the Jaypee acquisition doesn’t materialize.
Dalmia Bharat Ltd has initiated the process of buying land in Jaisalmer, Rajasthan for a new plant even as it pursues the heavily contested acquisition of Jaiprakash Associates Ltd’s cement assets, according to managing director and chief executive Puneet Dalmia.
India’s fourth-largest cement producer is also proceeding with obtaining environment clearance (EC) and other regulatory permissions for the Jaisalmer plant, Dalmia said, reiterating that the project remains an alternative pursuit in case the bid for the bankrupt Jaiprakash Associates does not fructify.
Last month, news agency PTI reported that Vedanta Ltd had emerged as the highest bidder for Jaiprakash Associates with an offer of ₹17,000 crore. Vedanta’s bid will need approvals from Jaiprakash Associates’s committee of creditors and then the National Company Law Tribunal, which may take 10–12 months.
Jaiprakash Associates, which was owned by Jaypee Group, was admitted into insolvency in June last year.
“We expect that we will be able to complete the majority of land acquisition and obtain EC by March 2026… During the same time, we will also get clarity on the ongoing resolution of Jaiprakash Associates under IBC (Insolvency and Bankruptcy Code)," Dalmia told Mint in emailed comments.
Apart from Vedanta, Dalmia Bharat, part of the cement-to-sugar Dalmia Bharat Group, is pitted against Adani Enterprises Ltd, Jindal Power Ltd, and PNC-Infratech Ltd for the assets of Noida-based Jaiprakash Associates.
In August, the Competition Commission of India approved Dalmia Bharat’s plan to acquire a 100% stake in Jaiprakash Associates through the corporate insolvency resolution process—as it has for the other bidders.
Jaiprakash Associates’s committee of creditors is set to seek details from the bidders on how they intend to finance the acquisition of Jaiprakash Associates and put the resolution plans to vote in November, Mint reported on 19 October.
- Dalmia Bharat has begun acquiring land and clearances for a 5–7 mtpa cement plant in Jaisalmer, Rajasthan, as an alternative to the Jaiprakash Associates acquisition.
- The company remains in contention with Vedanta, Adani, Jindal Power, and others for Jaypee’s cement assets under insolvency; a final decision could take up to a year.
- With ongoing capacity additions in Belgaum, Pune, and Kadapa, Dalmia Bharat targets 70–72 mtpa cement capacity by FY28 while maintaining a prudent capital allocation strategy.
Dalmia’s expansion drive
Dalmia Bharat’s Jaisalmer facility is expected to have a cement-manufacturing capacity of at least 5 million tonnes per annum (mtpa) and cost more than ₹3,600 crore, per industry experts. Puneet Dalmia did not comment on the potential investment for the greenfield plant.
Overall, Dalmia Bharat has 15 cement manufacturing plants catering to 22 states, ICICI Direct said in a report earlier this month. Of the company’s total capacity of 49.5 mtpa, 44% is located in southern states, 50% in the east and northeast, and 6% in the west, the brokerage said.
Puneet Dalmia denied the Jaiprakash Associates acquisition process was delaying Dalmia Bharat’s expansion plans, which he said were progressing as scheduled.
A combined 6 mtpa expansion in Belgaum and Pune will serve Western Maharashtra and Northern Karnataka, and another 6 mtpa facility at Kadapa, with a bulk terminal in Chennai, will serve Tamil Nadu and Andhra Pradesh, Dalmia said.
“Beyond this, the new clinker line of 3.6 mtpa in northeast gives a surplus clinker of about 1 mtpa which gives us potential to add another 2–2.5 mtpa of split grinding unit in northeast or east. Since split grinding units have a lead time of 12–15 months for setting up, we have some time before we announce it," he said, adding that this will take Dalmia Bharat’s cement capacity to around 64 mtpa by FY28.
Clinker, a nodular material produced by heating limestone, clay, and other minerals in a kiln, is a key intermediate used in making cement. Split grinding units operate independent of the main cement plant, primarily grinding clinker and other materials to produce finished cement.
“Our priority is to ensure that we have a healthy balance sheet and, hence, we would like to be prudent and remain within the guardrails of our capital allocation framework while committing capital towards capacity expansion," Dalmia said. “Thereafter, if JP (Jaiprakash Associates) is 8–10 mtpa, or we do Jaisalmer, which could be 5–7 mtpa, we have potential visibility of reaching 70–72 mt by 2028."
Pivotal acquisition
Jaiprakash Associates’s cement assets are located predominantly in India’s north and central regions, where Dalmia Bharat is trying to gain a foothold.
This is Dalmia’s second attempt at acquiring these assets.
In December 2022, Dalmia Bharat had entered into a deal with Jaypee Group to acquire its flagship cement and power units (Jaiprakash Associates) at an enterprise value of ₹5,666 crore.
But the deal fell through as Jaiprakash Associates went into insolvency. The tolling arrangements—for using Jaypee’s plants for manufacturing Dalmia Bharat’s offerings—were discontinued in October 2024, with Dalmia writing down ₹113 crore towards the failed acquisition.
Jaiprakash Associates’s businesses span construction, real estate, fertilizers, cement, hotels, and power. Fertilizers, construction and real estate accounted for 45%, 32%, and 15% of its total revenue of ₹6,600 crore in 2023-24.
Dalmia Bharat has lowered its capital expenditure projection for FY26 from ₹4,000 crore to ₹3,000 crore, driven by improved supplier credit terms and a deliberate pause on significant new greenfield projects like the Jaisalmer plant.
The company has some distance to go to catch up with its larger rivals.
Aditya Birla Group’s UltraTech Cement Ltd, India’s largest cement producer with an installed capacity of 188 mtpa, expects to end 2025-26 with 200 mtpa capacity, chief financial officer Atul Daga said in a post-earnings call with analysts on 18 October.
Adani Cement exited 2024-25 with a combined capacity of more than 100 mtpa across its various acquired entities, including ACC Ltd and Ambuja Cements Ltd.
Kolkata-headquartered Shree Cement, India’s third-largest cement producer, expects to end this financial year with 68.8 mtpa capacity, up from 62.8 mtpa now, and take it to 80 mtpa by FY28, the company said in its first-quarter earnings statement.
Dalmia Bharat shares have gained more than 18% this year (until 24 October), while UltraTech is up nearly 4%, Ambuja Cements about 3.5%, and Shree Cement about 12%. The benchmark Sensex index has gained about 7% this year, and Nifty 50 about 8.5%.
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