The bankruptcy of JP Associates makes it an attractive takeover target for conglomerates

The initiation of bankruptcy proceedings against Jaiprakash Associates has paved the way for a takeover by the Adani group, the JSW group and other entities growing through acquisitions, analysts said.

Earlier this month, the National Company Law Tribunal initiated formal insolvency proceedings against JP Associates, effectively ending the arrangement between the company and Dalmia Bharat, which had agreed to acquire the cement, clinker and power plants for ₹5,666 crore. Dalmia Bharat said it will cooperate with the resolution professional and the company on this matter.

“This means Dalmia will have to re-bid for JAL’s assets as all binding agreements with the now suspended JAL management are effectively null and void,” Nomura Securities said in a note on Dalmia Bharat. “We see increased competition from companies like Adani and JSW that have the resources to buy the entire JAL group,” he added.

Sources said both groups were interested in the JP Associates assets and are likely to submit offers once the process begins, which will likely take some time as there are legal complexities to sort out.

The Adani Group and JSW Group did not respond to emails seeking clarification regarding their possible interest in JP Associates.

There have been reports in the past about the Adani group’s interest in one of JP Associates’ cement plants. The group’s cement arm Ambuja Cements had earlier this month announced the acquisition of Hyderabad-based Penna Cements for ₹ 10,420 crore and, as it turned out, the group had amassed a war chest of around ₹ 3-3.5 billion for acquisitions in the sector. The race is on to catch up with market leader Ultratech and achieve a production capacity of 140 million tons by 2028.

JSW Cement is also looking for opportunities in the industry. The last time it acquired Shiva Cement was in 2017 for less than ₹ 100 crore. It plans to triple its production capacity to 60 million tonnes over the next five years. The initial public offering scheduled for the next fiscal year will be used to expand capacity.

Jaiprakash Associates has liabilities of ₹51,496 crore to 29 banks and financial institutions and over 1,500 homebuyers for its real estate project.

The company reported a loss of ₹ 1,340 crore in FY24; very little changed from last year while revenues declined by about 10 per cent to ₹ 6,568 crore. Together with its joint venture companies, it has an annual cement production capacity of over 10 million tonnes.