Vedanta has received CCI approval to acquire Jaiprakash Associates for INR 17,000

Vedanta Limited has received the green light from the Competition Commission of India (CCI) to acquire Jaiprakash Associates Limited (JAL) for approximately Rs 17,000 crore under the Insolvency and Bankruptcy Code (IBC) process. This represents a significant development in Vedanta’s attempt to expand beyond its mining and base metals operations into sectors such as cement, real estate and infrastructure.

JAL, once the flagship company of the Jaypee group, has faced increasing financial distress, with creditor claims totaling nearly Rs 59,000 crore. The acquisition plan includes a combination of upfront and staggered payments, reflecting the complexity of the deal. The CCI approval follows a competitive bidding round, making Vedanta the highest bidder for the struggling group.

Vedanta emerged as the favorite bidder in a hotly contested auction, beating Adani Group with a total bid of Rs 17,000 crore, which equates to Rs 12,505 crore in net present value terms. The payment structure includes an upfront settlement of about Rs 3,800 crore, followed by annual installments of Rs 2,500-3,000 crore over the next five years. Other competitors, such as Dalmia Bharat Group, Jindal Power and PNC Infratech, did not submit final bids in the closing round.

JAL’s financial distress has been exacerbated by protracted insolvency proceedings and debt restructuring attempts. The National Asset Reconstruction Corporation Limited (NARCL), which received the group’s stressed loans from a State Bank of India-led consortium, leads the group of creditors, whose recognized claims stand at over Rs 59,000 crore. Lenders face a potential cut of nearly 71 percent based on Vedanta’s offer, highlighting the scale of losses the financial system has already absorbed. CCI also granted permission to other major groups to submit resolution plans, although none of them matched Vedanta’s final proposal.

Credit analysts have reacted cautiously to Vedanta’s acquisition strategy, expressing reservations about the impact of the deal on the company’s financial profile. CreditSights, a Fitch Group company, rated the acquisition “credit negative” for both Vedanta Limited and its parent, Vedanta Resources Limited, citing JAL’s heavy debt load and poor operating performance. In its assessment, CreditSights said: “We view the acquisition as credit negative for VEDL and (parent company) Vedanta Resources Ltd, given JAL’s heavy debt pile, deteriorating earnings, and little strategic synergistic rationale (in our view).”

The CreditSights report also highlighted the risks associated with Vedanta’s entry into cyclical and capital-intensive industries, such as real estate, cement and infrastructure, which fall outside the traditional mining and metals sectors. The memo also cited implementation challenges, noting Vedanta’s continued “aggressive capital expenditures and appetite for expansion.”

S&P Global Ratings also noted that most of JAL’s current operations are loss-making and will likely require significant capital investments to revive margins. The agency commented that Vedanta’s ability to optimize these assets is a key determinant of the overall success and value creation of the acquisition.

CCI approval is a crucial procedural step, but much will depend on Vedanta’s ability to manage the transition and meet its obligations amid ongoing market scrutiny.