Crisis-hit Jaypee Group’s flagship firm, Jaiprakash Associates, has recently defaulted on loans amounting to Rs 4,044 crore, including both principal and interest payments. This default was disclosed in a regulatory filing made by Jaiprakash Associates Ltd (JAL). According to the filing, the company failed to repay a principal amount of Rs 1,660 crore and interest of Rs 2,384 crore by the June 30 deadline.
These loans encompass various banking institutions and consist of fund-based working capital, non-fund-based working capital, term loans, and FCCB (foreign currency convertible bonds). The total borrowing of Jaiprakash Associates currently stands at Rs 29,477 crore, with only Rs 4,044 crore overdue as of June 30, 2023. However, it should be noted that the entire loan is currently undergoing restructuring.
Jaiprakash Associates has been undertaking tangible efforts to reduce its borrowings. Following the proposed divestment of its cement business and ongoing restructuring plans, the company anticipates a significant reduction in its debt upon the plan’s implementation.
Regarding legal matters, ICICI Bank has approached the NCLT (National Company Law Tribunal) Allahabad under section 7 of the Insolvency and Bankruptcy Code 2016 against Jaiprakash Associates. The company has contested this move. The case is pending a decision, which will be made simultaneously with the NCLT’s approval of the proposed transfer of real estate to a Special Purpose Vehicle (SPV) under a scheme of arrangement.
Jaypee Group, including its subsidiaries, has faced financial difficulties, leading to various legal disputes and defaults. In September 2018, ICICI Bank filed an insolvency petition against Jaiprakash Associates, while the State Bank of India (SBI) has also approached the NCLT, claiming a default amounting to Rs 6,893.15 crore as of September 15, 2022.
To alleviate its financial woes, Jaiprakash Associates and its group companies have recently announced the sale of their remaining cement assets to Dalmia Bharat Ltd for an enterprise value of Rs 5,666 crore. This move is part of the company’s strategy to reduce its debt burden. Previously, as part of its debt resolution efforts, Jaiprakash Associates had sold over 20 million tonnes per annum of cement capacity to UltraTech Cement, a subsidiary of the Aditya Birla group, between 2014 and 2017.
Additionally, Jaypee Infratech Ltd (JIL), a former subsidiary of Jaiprakash Associates, recently received approval from the NCLT for its acquisition by Mumbai-based realty firm Suraksha Group. The acquisition aims to complete the construction of approximately 20,000 apartments in Noida. However, several parties have contested the NCLT’s order, leading to appeals before the National Company Law Appellate Tribunal (NCLAT).
As Jaiprakash Associates continues to face financial challenges, it remains committed to reducing its borrowings through strategic measures. The company’s restructuring plans and the proposed sale of assets are part of its efforts to alleviate its debt burden and resolve its financial troubles.
