The Jaypee Group's cement company Jaiprakash Associates approved demerger of its Andhra Pradesh and Gujarat units and merge them into its wholly owned subsidiary Jaypee Cement Corp that is building a three million tonnes plant in Karnataka.

The move is being seen as a prelude to the group's plan to sell stake in cement business. The Japyee Cement Corp will have an annual capacity of 8.5 million tonnes and plants in three important states of Andhra Pradesh, Gujarat and Karnataka.

JP Associates' annual cement-making capacity is 28 million tonnes, making it India's third largest cement producer, behind Switzerland's Holcim and the Aditya Birla Group.

The group is further expanding capacity to 35 million tonnes by the middle of 2012. In 2010-11, revenue from Jaypee's cement business was INR 5,455.79 crore, while debt was 11,500 crore.

Mr Vineet Hetamsaria head of research at PINC Research said that "Jaypee would be able to get better valuation for these units as both Andhra and Gujarat plants, along with the upcoming one at Karnataka, are new plants with latest technology as against its old plants acquired from government of Uttar Pradesh.”

(Sourced from ET)