Ambuja's ₹580 Cr Bid for Jaypee Cement Falls Short, Lenders Push Back

Ambuja Cements, backed by the Adani Group, has submitted a ₹580 crore bid to acquire Jaypee Cement Corporation, which is currently undergoing insolvency proceedings. However, the offer has hit a roadblock, it falls well short of the company's liquidation value of ₹880 crore, leaving lenders unwilling to accept the terms as they stand.

Ambuja is now the only contender in the race. My Home Group, the only other bidder, exited the process after submitting a ₹300 crore offer. With no competition left, lenders are in talks with the Adani Group to negotiate a higher price, according to the Economic Times.

This is not the first time lenders have pushed back on low offers. Last year, they rejected a ₹227 crore bid from National Asset Reconstruction Company (NARCL) for Jaypee Cement's debt, deeming it insufficient.

What the Numbers Mean

Under insolvency rules, two independent valuers are appointed to determine a company's fair value and liquidation value, with the average serving as a benchmark. The liquidation value reflects what lenders could recover if assets were sold piecemeal, while the fair value indicates the expected price if the business were sold as a going concern. Lenders typically favour liquidation when bids fall below the liquidation value, making Ambuja's current offer a difficult sell.

Jaypee Cement's resolution professional has admitted total claims of ₹3,361 crore,₹2,892 crore from secured creditors and ₹469 crore from unsecured creditors, according to the Insolvency and Bankruptcy Board of India website. The company was admitted into corporate insolvency in July 2024 following a petition by State Bank of India.

A Strategic Fit for Adani

Jaypee Cement operates an integrated cement capacity of five million tonnes per annum, along with two captive power plants in Andhra Pradesh. However, its 1.2 MTPA plant in Karnataka and a 60 MW captive power plant there remain suspended.

For Adani, the bid fits a well-established playbook. Since acquiring Holcim's Indian businesses, Ambuja Cements and ACC, for $10.5 billion in 2022, the group has steadily consolidated its position in the cement sector through acquisitions including Sanghi Industries and Penna Cement. The group is targeting a combined capacity of 155 million tonnes per annum by FY28, and acquiring distressed assets at a discount remains central to that strategy.