Ambuja Cements Submits ₹580 Crore Bid For Bankrupt Jaypee Cement

Ambuja Cements, backed by the Adani Group, has submitted a ₹580 crore offer to acquire Jaypee Cement Corporation through the insolvency process, becoming the sole bidder after My Home Group withdrew its ₹300 crore offer and exited the race.

The resolution, however, is far from settled. The Ambuja bid sits well below the liquidation value of ₹880 crore, a threshold that typically prompts lenders to consider breaking up and selling assets piecemeal rather than accepting a going-concern sale. Lenders are currently in negotiations with the Adani Group, pushing for a higher offer before any deal is finalised.

Ambuja Cements Ltd shares dipped more than 2% at 12:37 PM on Monday, trading at ₹427.6.

The Claims And The Gap

Total admitted claims against Jaypee Cement stand at ₹3,361 crore, with secured creditors accounting for ₹2,892 crore and unsecured creditors holding the remaining ₹469 crore, according to the Insolvency and Bankruptcy Board of India.

The liquidation value of ₹880 crore represents what lenders might recover if the assets were sold off individually. A going-concern sale would typically command a higher price. With the Ambuja offer at ₹580 crore, lenders are staring at a recovery that falls short of even the liquidation benchmark.

A History Of Rejected Bids

This is not the first time bids for Jaypee Cement assets have been turned down. Lenders previously rejected a ₹227 crore offer from the National Asset Reconstruction Company for the company's debt, calling it too low. Court documents also show that a bid from Vedanta, which offered ₹3,400 crore more than a competing proposal, was also rejected by lenders at an earlier stage of proceedings.

The company was admitted into corporate insolvency in July 2024 following a petition filed by the State Bank of India.

What Jaypee Cement Owns

Jaypee Cement has an integrated cement manufacturing capacity of five million tonnes per annum. It owns two captive power plants at Jaggayyapet in Andhra Pradesh, a 35 MW unit that is operational and a 25 MW unit currently under implementation at the same site. Its 1.2 million tonne per annum cement plant at Shahabad in Karnataka, along with a 60 MW captive power plant at the same location, are currently suspended for operations.

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The Adani Connection

The Ambuja bid for Jaypee Cement comes in the broader context of the Adani Group's existing involvement in the Jaypee insolvency universe. The National Company Law Tribunal had previously approved a ₹14,535 crore resolution plan submitted by the Adani Group for Jaypee Associates, the parent entity, with support from majority lender National Asset Reconstruction Company, which held 85% of the voting share.

Whether lenders accept the current ₹580 crore offer, push back for a higher number or opt for liquidation will depend on how negotiations with Ambuja develop over the coming weeks.

Source:

Economic Times