Jaiprakash Associates defaults on ₹4,616 crore loan amid restructuring

Jaiprakash Associates Ltd (JAL), the parent company of the distressed Jaypee Group, reported in a regulatory filing on May 6 that it failed to meet its loan repayment obligations on April 30, totalling ₹4,616 crore. The sum comprises a principal of ₹1,751 crore and interest payments of ₹2,865 crore.

JAL disclosed, "Total borrowing (including interest) of the company is ₹29,805 crore, repayable by 2037, against which only ₹4,616 crore is overdue as of April 30, 2024."

The company's financial commitments, serviced through various banking facilities, including fund-based and non-fund-based working capital, term loans, and foreign currency convertible bonds (FCCBs), are undergoing restructuring. 

Out of its substantial debt of ₹29,805 crore, JAL plans to transfer ₹18,955 crore to a Special Purpose Vehicle (SPV). This transfer, which is part of a Scheme of Arrangement, awaits approval from the National Company Law Tribunal (NCLT) and has already been endorsed by all relevant stakeholders.

"As a responsible borrower, the company has been taking tangible steps to reduce the borrowings. After the proposed divestment of the cement business and the restructuring are taken into consideration, the borrowing will get almost to nil." JAL elaborated on its efforts to mitigate its financial challenges.

In addition to these financial manoeuvres, JAL is facing legal challenges. ICICI Bank has petitioned the NCLT Allahabad, following directives from the Reserve Bank of India under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2016, to initiate insolvency proceedings against the company. JAL is currently contesting this action, as per a PTI report.

"The matter is pending to be decided simultaneously with the Scheme of Arrangement for transfer of real estate to the SPV to be sanctioned by the NCLT," stated the filing. Similarly, the State Bank of India has also approached the NCLT Allahabad with a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against JAL, further complicating the company's legal course of action.

JAL has been actively divesting its cement operations to alleviate its debt load. Moreover, related to its former subsidiary Jaypee Infratech Ltd (JIL), the Suraksha Group had its acquisition bid approved by the NCLT in March 2023, aiming to complete approximately 20,000 pending apartments in Noida. This decision, however, is now being contested at the National Company Law Appellate Tribunal (NCLAT) by various stakeholders, as per the PTI report.