Lenders to Jaiprakash Associates have decided to take control of the company’s vast land bank to recover their loans worth Rs 13,000 crore. The land bank will, however, be liquidated at a later date, the lenders decided at a meeting in Mumbai on Thursday.
Jaypee Group’s three listed companies, which reported Rs 40,157 crore of debt as of September last year, were defaulting on bank loans, leading to asset sales in the last three years. In a joint lenders’ forum meeting held on Thursday, the banks took into account the company’s financial metrics, on the basis of which the Jaypee management reported that they expected Rs 10,000 crore of debt to move to Ultratech Cement, which has taken over its cement plants in central and western India.
Of the Rs 6,000-crore “sustainable” debt to be retained on the JP Associates books, the operating assets, including a power plant, will be used to service debt. Another Rs 13,000 crore debt will move to a special purpose vehicle (SPV) that will house the land bank in Uttar Pradesh’s Noida. “While the SPV would be technically owned by JP Associates for tax purposes, the lenders will control it. The banks would work out a plan to liquidate the land bank and how to use it to recover their loans,” said a source. Three leading banks — ICICI Bank, State Bank of India, and Axis Bank — are driving the debt recast package, which will now be circulated among all lenders to the company for final approval in 15 days. The stock of JP Associates reacted positively to the JLF meeting as its shares closed five per cent up at Rs 13 a share.
Jaypee Chairman Manoj Gaur did not comment on the JLF package. Jaypee Group is on an asset sale spree and has managed to bring down its debt from Rs 60,000 crore to manageable levels in recent years.
In October last year, the CK Birla group firm, Orient Cement, acquired a 74 per cent stake in Bhilai Jaypee Cement and Nigrie cement grinding unit in Madhya Pradesh from Jaypee Group companies at an enterprise valuation of Rs 1,950 crore.
The sale of assets by Jaypee Group was necessitated as in its 2015-16 results statement, Jaiprakash Associates had revealed that it had defaulted on bank loans, interest and statutory payments of Rs 4,539 crore.
In February 2016, Jaypee sold its cement unit with a capacity of 17.2 mtpa to Aditya Birla group’s Ultratech at an enterprise value of Rs 16,000 crore. Earlier, in November 2014, Jaiprakash Power had sold its hydropower projects to JSW Energy for Rs 9,300 crore.
Analysts said the group fell into financial trouble as it tried to grow too fast with diversification into real estate and infrastructure sector without worrying about any slowdown. Two of its marquee projects – Delhi-Agra Expressway and Formula 1 stadium – turned out to be white elephants with zero visibility of earnings. To make matters worse, Axis Bank took over the group’s headquarters in Delhi as the group failed to repay loans.
Aggressive Buyers Hold Protest In Noida Against Jaypee Builders
Greater Noida: Hundreds of home buyers staged a protest outside a police station here on Saturday against Jaiprakash Industries and others for duping them by failing to hand over flats even several years after the promised time.
Followed by a massive protest outside Surajpur police station where the office of the Senior Superintendent of Police is also located, the local police lodged a FIR against the company.
Noida Police has booked Jaiprakash Associates, its Managing Director Manoj Gaur and Directors Sunny Gaur and Pankaj Gaur, company Jaypee Infratech Limited and its Managing Director Sameer Gaur and Director Sachin Gaur with two others - Ajit Kumar and R.K. Anand.
One of the complainants, Chander Goyal told IANS that accused have been booked under various charges dealing with criminal conspiracy, cheating, criminal breach of trust and forgery.
The First Information report was lodged in the Expressway police station in Noida.
Devender Yadav, who was leading the association of Jaypee Wish Town investors, told IANS that the assurance by a senior police official came after after the huge protest since early morning.
Yadav accused Jaiprakash Industries of cheating around 30,000 home buyers.
\"The company assured to deliver 35,000 houses in Jaypee Wish Town project in Greater Noida, an around Rs 25,000 crore project across 12,000 acres, by 2013,\" he said, adding that that till now only possession has been given to 5,000 people while 30,000 people are still waiting.
He said that people started investing money in the project from 2007 with the company promising possession by 2013 but four years have already passed but the project has not been completed.
Another investor, Pranab Dhekial said that he was attracted by the company\'s attractive advertisements to get a flat in Kasa Isles in Jaypee Wish Town and booked a three bedroom flat for which he paid Rs 30 lakh.
He said that the company assured him to hand over possession by 2013 but failed to do so till even now on one pretext or the other.
Vikas Arora, another investor, alleged that officials of the company were involved in diverting funds for their own benefits with an intention to cheat and expressed concern that the company was never willing to complete the projects.
A disappointed Niti Singh, one of the buyers of Kasa Isles homes, said that she is waiting for the delivery of her flat from the past seven years while paying 90 to 95 per cent of the entire amount.
An FIR against Jaiprakash Associates, Manoj Gaur, Sunny Gaur and Pankaj Gaur, Jaypee Infratech Ltd and Sameer Gaur and Sachin Gaur under various charges including cheating, criminal breach of trust and fraud was lodged by Delhi Police\'s Economic Offences Wing (EOW) on a complaint by Delhi-based investor Sanjiv Bansal.
Bansal, who also supported the protest of other buyers, has alleged that accused were in intention to cheat innocent buyers since they started the projects.
In his FIR, he said that he has been a victim of the conspiracy hatched by the accused and had been deprived of hard-earned money which could have been utilised for the better future of his children.
He also said that when he visited the company\'s office in Noida, the staff told him that now it will be difficult to complete the flats as there are no funds available for the project.