jaypee group debt

The Jaypee executive remains confident that the company will see a turnaround. The company’s goal: $15 billion in revenue by 2020, a steep rise from the under $1 billion ( ₹ 3,547 crore, exchange rate at ₹ 45/$) in 2005-06. Jaypee Group plans to sell assets to cut debt by `15,000 crore 4 min read. The group has sold a slew of assets to cut debt, but what happens when all the good assets are offloaded? The JSW deal is expected to be completed by September. New Delhi: Jaypee Infratech Ltd is the infrastructure and construction arm of the Rs 6,190 crore Jaypee group, responsible for projects like the Yamuna Expressway and the F1 circuit in Greater Noida. The revenue structure in Formula One racing is in favour of the Formula One management and not the circuit owner. The consolidated interest cost of Jaiprakash Associates surged 46 per cent in 2012/13 to Rs 4,569 crore. The group, founded by Jaiprakash Gaur, witnessed a phenomenal rise between 2000 and 2006, riding on the realty and infrastructure booms. The Manoj Gaur-led group is in the process of reducing its debt of over Rs 72,000 crore by selling some of its assets, which could also help it deleverage the balance sheet. He is the Chairman of the Jaiprakash Associates Limited. Between 2006 and 2012, the group invested ₹ 60,000 crore in real estate, power and cement. Ltd, the company had a robust plan in place and it was well poised to grow. The debt-ridden company had submitted a plea against the National Company Law Appellate Tribunal (NCLAT) order that had restrained the parent company from participating in the auction of Jaypee Infratech Limited (JIL). “I think they are sincere and serious in cutting their debt," said the public-sector bank executive quoted earlier. He declined to be named. This includes Jaiprakash Power Ventures’ consolidated debt of ₹ 32,065.15 crore, Jaypee Infratech’s consolidated debt of ₹ 9,101.84 crore and another ₹ 22,832.16 crore in stand-alone debt for Jaiprakash Associates. The people, who aren’t a part of the group, said the focus will be on improving shareholder value. One reason, perhaps, was the fact that the Bahujan Samaj Party-run (Uttar Pradesh) government (which cleared the plans) was replaced by one run by Samajwadi Party," the bank executive said. The flagship firm of the debt-ridden Jaypee Group is a diversified infrastructure company, engaged in engineering, construction or real estate development, manufacture or marketing of cement, hospitality and sports management. In an April 2015 note, Credit Suisse noted that four of the 10 companies in House of Debt—an August 2012 report by the brokerage, evaluating 10 corporate houses that had the largest debt piles—had defaulted on some portion of their loans. "A petition is under filing by Yes Bank Ltd under section 7 of the Insolvency and … Real estate prices nosedived and that was followed by a dip in the demand for cement. Ltd, refused to comment on the company specifically, but said that power generators face many challenges such as low PLFs (plant load factor), uncontracted capacity, higher operating costs from coal blocks won in auction, part capacity under development, revision of capital costs mainly for hydro projects pending, and limited upside in open trade. said the executive. “Our chairman (Jaiprakash Gaur) said that in tough times, only good things go," he said in the interview. The so-called golden triangle of Delhi-Agra-Jaipur was pivotal to their game plan, said a person who was directly involved in the planning and execution of the event. This is the first part of the series. In a bid to service its Rs-75,000-crore debt, Jaypee Group is setting its sights on the sale of other business. It sold tickets worth $25 million and lost $40 million on the race every year. Jaypee Group on Wednesday kick-started its asset monetisation plan to reduce debt by R15,000 crore with the sale of its Gujarat cement manufacturing unit to UltraTech Cement at an enterprise value of R3,800 crore. But his interview with Mint on 13 May 2014 helps shed light on his thinking. The Jaypee group - which is set to sell its cement unit for Rs 21,000 crore enterprise valuation - may have to sell others assets to retire its massive Rs 75,000 crore of debt, which is eating into its earnings and delaying recovery of loans, said bankers. Of this, the company expects to shave off ₹ 24,441 crore through asset sales by September. The focus, for now, will continue to be on debt reduction. “We banks should have realized that this company’s revenues have been impacted which in turn impacts payment schedules. You may ask any investment bank or commercial bank; they will vouch for the same," the Jaypee executive quoted above said. But the venture may remain a non-starter due to fund-crunch and lack of business experience in the sector. So this is only a temporary accounting issue," said an executive of a public sector bank who did not want to be identified. Plans included a cricket stadium that could seat 100,000 people, a tennis stadium and five townships on the Noida-Greater Noida Expressway (the first township, known as Wish Town, is yet to be completed). The group is facing a huge protest from home buyers because of significant delays in delivery of projects. (The one reported freebie that the Gaurs did allegedly get was the land for the circuit, which was reportedly given by the Uttar Pradesh government as a part-payment for the Delhi-Agra expressway that the group was building at the time.). Jaypee was not alone. The bench, comprising justices AM Khanwilkar and Dinesh Maheshwari, said it would deal later with the revised proposal of state-owned NBCC, to complete the stalled … Then came the controversies. Jaypee’s ambitions got a further boost when then Uttar Pradesh chief minister Rajnath Singh announced plans to build international airport at Greater Noida. The initial contract is for five years. In addition to this cost, Jaypee Group spent $15-20 million annually in operational costs—track and event management, logistics and transport. In the past year, the Jaypee Group has sold several assets and brought down its debt by ₹ 20,000 crore. The Formula One management was of the opinion that they pay taxes in London and should not be forced to pay taxes again. CARE Ratings revises its rating on Rs11,885 cr of long-term bank facilities of Jaiprakash Power Ventures to 'D'. In September, Jaypee’s power arm, Jaiprakash Power Ventures Ltd, announced the sale of two hydropower plants with a capacity of 1,300MW to Sajjan Jindal’s JSW Energy Ltd for ₹ 9,700 crore. The operating cost totalled up to $50-65 million. That was not the only broken promise. “Some companies suffer more than a few of these issues. The group also sold its entire 74% stake in a Bokaro-based joint venture with steelmaker Steel Authority of India Ltd (SAIL) for ₹ 690 crore in March this year. Jaypee is the engineering and construction company for India's Yamuna Expressway, which opened 9 August 2012. You are now subscribed to our newsletters. In a significant direction that will help NBCC in faster completion of stuck projects of Jaypee Group, the tribunal ordered that the Rs 750 crore deposited by Jaypee Infratech's parent firm Jaiprakash Associates Ltd (JAL) with the registry of the Supreme Court would be part of the resolution … With every asset that he sells, the business empire that he created with his father Jaiprakash Gaur—spanning infrastructure, real estate, power and cement—diminishes even as his competitors grow stronger with every Jaypee asset they buy. Their aspirations were soaring, businesses were expanding, and banks were putting money into whatever the Gaurs wanted. According to a Mint analysis, the 100 listed companies with the largest amount of debt saw a marginal 4% fall in their aggregate debt levels in 2014-15. Jaypee Group may hive off its hospitality, fertilisers units. Jaypee Group’s Companies ... Jaypee Group refutes Economic Times report on debt, and gives figures of Groups assets; JP Associates up on Rs 913-cr Bhutan power contracts 26 March 2012, Business Standard ; Founder Chairman letter; Jaiprakash Associates Update "Dream Catcher" : Founder Chairman shares his story with Financial Express ; JAL among India’s Fastest Growing Companies; Press Note : … Contact any time: (120) 4609000, 2470800 , Fax: (120) 4609464, 4609496 Jaypee Group, Sector-128 Noida-201304 Uttar Pradesh India Corporate:Jaypee@jalindia.co.in investors :jal.investor@jalindia.co.in Important Links To revive its business operations and … Vishwanath Nair contributed to this story. According to data from corporate database provider Capitaline, the debt of these firms stood at ₹ 13.42 trillion as of 31 March, compared with ₹ 14.04 trillion at the end of the previous financial year. Kameswara Rao, leader (energy, utilities and Mining) at PricewaterhouseCoopers Pvt. Debt-ridden Jaypee Infratech has an outstanding debt of nearly Rs 9,800 crore, of which Rs … Of the ₹ 49,038 crore, ₹ 5,323 crore is in the form of non-convertible debentures while the remaining amount includes short-term and long-term bank facilities. Between 2000-01 and 2007-08, banks had a high lending appetite and evaluated investment opportunities by looking at individual projects and may have overlooked the business and financial risks of the complete group. “In hindsight, we should have estimated a 5.5% GDP growth instead of 8.5%. "We have … As of March 2015, Jaypee Group had a total debt of ₹ 63,999.15 crore. Default rating, according to CARE, implies that instruments with this rating are in default or are expected to be in default soon. P.R. So, while the contract stands, the races won’t be held until the tax issue is resolved. Jaypee Group defaults on Rs 4,460 cr debt, payments. The group is confident that all investment and commercial banks stand by its plans. Manoj Gaur is the elder son of Jaiprakash Gaur. Join Mint channel in your Telegram and stay updated with the latest business news. So here’s what happened: Jaypee Infratech is saddled with a total debt of almost Rs 8,000 crore. Prior to first round of divestment that started in 2013-14, Jaypee boasted of assets worth ₹ 1 trillion. The next government led by Mayawati then announced a night safari in Greater Noida. The Jaypee Group successfully completed projects in 18 states of India and Bhutan. At least 25% of the operational costs went to the government’s kitty as taxes. Your session has expired, please login again. In 2013, Jaypee Group decided to enter the business of manufacturing microchips in a venture with International Business Machines Corp. (IBM). In December last year, the Committee of Creditors (CoC) comprising 13 banks and around 21,000 homebuyers approved the resolution plan of NBCC. “When you do certain things for the first time, it is about prestige.". For the June quarter, the three listed companies had a combined interest cost of ₹ 1,850 crore. To be sure, there are more assets up for sale, however, a definite agreement with an enterprise value for the asset is still to be finalized. “With this motto and clarity, we (decided) instead of thinking which project is good and which is not, we will deleverage even if it means selling good assets.". The idea was to create an event on a scale that India had never seen before, and Jaypee wanted to expand its already thriving business around it. The semiconductor business is susceptible to fast-evolving technologies and hence companies in the space need to constantly invest in research and development, something which Jaypee doesn’t have the cash for. Copyright © HT Digital Streams Limited All rights reserved. Jaypee group is facing a debt crisis and its group firm Jaypee Infratech has been taken over by a National Company Law Tribunal (NCLT)-appointed IRP for the recovery of bad loans. The group has already sold many cement and power plants to reduce its debt. The circuit owners have to pay the Formula One management $35-45 million a year as a licence fee. Last August, a grinding unit in Panipat was sold to Shree Cement Ltd for ₹ 360 crore. Reflecting substantial financial stress, diversified Jaypee group companies have defaulted on loans and other payments worth Rs 4,460 crore. But it’s yet to turn profitable and may not be able to repay all its loans even after selling its remaining assets. “The strategic vision shared by the Jaypee team seemed to have an element of truth," Mohanty said, referring to Jaypee Group’s plans to grow the business around the golden triangle. “We’ve created quality assets. Source: PTI. Besides, though there was a shortage of power in Uttar Pradesh, the government did not have money to pay for it. Sanjai and Joel Rebello in Mumbai contributed to this story. Jaiprakash Power Ventures is in discussion with banks to refinance loans for the Nigrie thermal power project under the 5/25 policy which allows banks to extend loan repayment periods up to 25 years, with an option of refinancing the loan every five years. This had a spiralling effect on companies and banks, which are now sitting on a pile of bad loans and restructured debt. “We will be out of this trouble by March 2016, god willing," he added. While downgrading corporate term loans and cement unit loans of Jaiprakash Power to “D" on Tuesday, CARE Ratings said this was due to weak liquidity and impending large repayment obligations in the near term for which funds are yet to be tied up. “Hence, part of the failure of the business can be linked to policy paralysis, which devoured a lot of net worth in the infrastructure space, a slowdown in the global economy and falling quality of bank assets, depreciation of rupee and rising interest rates," Mohanty added. The cash flows of the project have weakened as a result of subdued operating performance and the proposal for refinancing and additional financial assistance is under consideration with the lenders," said the rating agency on Tuesday while sharing its rationale for the default rating. In India, there were not many takers for tickets priced between ₹ 20,000 and ₹ 2.5 lakh for the 2011 race. In December, two of Jaypee’s cement factories and associated power plants were sold to UltraTech Cement Ltd for ₹ 5,400 crore. Jaypee is India's first largest cement producer and the largest private sector hydropower company with 1,700 MW in operation. The Group has on a consolidated basis failed to repay Rs 2,905.6 crore in principal amount to banks and another Rs 1,558.93 crore crore in interest payments. Log in to our website to save your bookmarks. “We had started most of our projects during 2007-09 when interest rates were much lower and GDP was growing at 8.5%," this executive said. Envisioning massive levels of tourism, Jaypee decided to build on those projections, literally. And then, the global financial meltdown reached the Indian shores. While the group’s 500 million sq.ft land bank around Delhi is intact, other assets have shrunk—it will be down to 12 cement plants from 19, one hydropower plant from three and three thermal power plants from five, in 2015. MUMBAI: Concerned over their massive exposure to the debt-laden infrastructure conglomerate Jaypee Group, its lenders met here today to take stock of the situation. It was then that they decided to bid to bring Formula One racing to India. Click here to read the Mint ePaperMint is now on Telegram. On top of this, global funds are moving between asset classes, originally triggered by commodities slump, but now showing a wider impact, and so global financial and strategic investors who otherwise could ride to rescue, are on a watch mode," he said. NEW DELHI: Yes Bank has approached the National Company Law Tribunal (NCLT), Allahabad to initiate insolvency proceedings against Jaypee Healthcare, which is a subsidiary of bankrupt Jaypee Infratech.Crisis-hit Jaypee group's flagship firm Jaiprakash Associates Ltd (JAL) is the promoter of Jaypee Infratech. Later in the same month, Jaiprakash Associates said it would sell its wind power plants with a total capacity of 49MW as it tries to bring down debt. Jaypee, too, has cut its debt but it is still far from meeting its own targets. Jaypee group, which has interests in power, cement, infrastructure and real estate, has been struggling with poor finances. “Sometimes you think why did they get into Formula One at all?" To Rs 4,569 crore for India 's Yamuna Expressway, jaypee group debt are now sitting on a pile of bad and! Investment-Heavy businesses, will continue to be completed by September a project, One... 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