Jaiprakash Associates Defaults on Rs 4,044 Cr Loans, Facing Financial Challenges
Jaiprakash Associates Ltd (JAL), the flagship company of the Jaypee Group, has recently disclosed that it has defaulted on loans amounting to ₹4,044 crore. The default includes both the principal amount and accrued interest, according to a report by news agency PTI.
The regulatory filing by JAL stated that on June 30th, the company failed to make repayments of ₹1,660 crore in principal and ₹2,384 crore in interest. These loans were obtained from various banks and encompass different types of financial obligations, including fund-based working capital, non-fund-based working capital, term loans, and FCCBs (foreign currency convertible bonds).
JAL clarified that its total borrowing, including interest, stands at ₹29,477 crore, with ₹4,044 crore now overdue as of June 30, 2023. The company anticipates a reduction of ₹18,319 crore upon the transfer of these debts to a proposed Special Purpose Vehicle (SPV), pending approval from the National Company Law Tribunal (NCLT).
The company emphasized that its entire loan portfolio is undergoing restructuring, and it has taken substantial measures to reduce its outstanding borrowings. JAL expects the proposed divestment of its cement business and ongoing restructuring efforts to significantly decrease its debt burden, with the revised restructuring plan projected to bring the borrowing close to zero.
Meanwhile, the ICICI Bank has initiated legal action against JAL by filing an insolvency petition under section 7 of the Insolvency and Bankruptcy Code 2016, as directed by the RBI. The company has contested this action. Additionally, the State Bank of India (SBI) has also moved the NCLT against JAL, claiming a total default of ₹6,893.15 crore as of September 15, 2022.
JAL recently announced the sale of its remaining cement assets to Dalmia Bharat Ltd for an enterprise value of ₹5,666 crore. This move is part of JAL’s strategy to reduce its debt burden and exit the cement sector. Previously, the company had resolved a portion of its debt by selling over 20 million tonnes per annum cement capacity to UltraTech Cement, a firm under the Aditya Birla group, between 2014 and 2017.
In March, the Suraksha Group, a Mumbai-based realty firm, received approval from the NCLT for its bid to acquire JIL, a subsidiary of JAL. The acquisition aims to facilitate the completion of approximately 20,000 apartments in Noida.
About Jaiprakash Associates:
Jaiprakash Associates Limited, also known as the Jaypee Group, is a major Indian conglomerate based in Noida, Uttar Pradesh. The company has diverse business interests including engineering, construction, power, real estate, hospitality, IT, sports, and education. Its headquarters are located in Noida.
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