Vedanta Secures Bid for Jaiprakash Associates with Rs 4,000 Crore Upfront Payment

Vedanta Ltd, a leading mining conglomerate, has secured the bid for debt-laden Jaiprakash Associates Ltd (JAL) with an upfront payment of Rs 4,000 crore, sources confirmed. The remaining amount will be paid over the next 5-6 years. This significant move beats the Adani Group in the auction, which saw a total of five bidders, including Dalmia, Jindal Power, and PNC Infratech.

The bid process, which was conducted by the lenders to find a suitable suitor for JAL, saw Vedanta emerge as the H1 bidder with a net present value (NPV) of Rs 12,505 crore. JAL, currently undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), has interests spanning real estate, cement, power, hotels, and roads.

The entire pay-out is expected to be staggered, with the first part of Rs 4,000 crore to be made post-approval by the National Company Law Tribunal (NCLT). This initial payment is anticipated to take around a year, and the remaining payments will be made over the next 5-6 years. Sources noted that the payments will be funded by Vedanta's balance sheet and supported by the internal accruals of JAL, minimizing the burden on Vedanta's financials.

Vedanta's bid was identified as the H1 bidder by the NARCIL-led Committee of Creditors (CoC). Although Vedanta has been identified as the leading bidder, the CoC is yet to conclude the process and vote on the successful resolution plan, which is expected to take another four to eight weeks. Post this, the implementation of the plan will take an additional three to four months.

JAL has an unpaid outstanding of Rs 55,371.21 crore as of August 15, according to a stock exchange filing. Vedanta's winning bid of Rs 12,505 crore, based on NPV, highlights the company's strategic approach to the acquisition. In such auctions, where payments are staggered over several years, the NPV method is used to evaluate the profitability of the project or investment by comparing the present value of future cash inflows to the current cost of the investment.

JAL's diverse portfolio, which includes power, real estate, cement, hotels, and EPC, complements Vedanta's existing businesses. Vedanta, already present in the power sector with a sizable portfolio, including Talwandi Sabo and Meenakshi Energy, will leverage its experience in metals, mining, and power to realize synergies in JAL's assets. Additionally, the company will tap into the potential of JAL's limestone and coal mines, further enhancing its resource base.

Once Vedanta's power business is demerged, the power business from JAL will add significant value. The real estate assets also hold development potential through strategic partnerships. Sources added that Vedanta's acquisition of JAL will not only strengthen its position in the market but also provide opportunities for growth and expansion in various sectors.