From Insolvency to Sale of Cement Units- The brief story of Jaiprakash Associates
Again a name added to the book of Corporate Insolvency; construction company Jaiprakash Associates has been sued in bankruptcy court by India’s largest lender, State Bank of India (SBI), for missing a loan payment of Rs 6,893 crore. The National Company Law Tribunal’s Allahabad bench received the application on September 19. (NCLT).
A brief string of defaults that led to Insolvency
On February 28, Jaiprakash Associates missed a payment to lenders in the amount of Rs 2,897 crore.
According to a notification sent to bourses, the business owes lenders Rs 1,353 crore and has Rs 1,544 crore in past-due interest.
About the company
JAL(Jaiprakash Associates Limited), which was founded in 1995, was created in 2004 as a result of the merger of Jaiprakash Industries and Jaypee Cement. JAL is active in a series of businesses, such as engineering and construction, cement manufacturing, expressways, hospitalities, real estate, and wind/thermal power plants all over India.
The chronology of defaults
2015- The National E-Governance Services Limited (NeSL) has mentioned December 10, 2015, to be the date of the debt default.
2017- The core company of the heavily indebted Jaypee Group, Jaiprakash Associates, was listed on the Reserve Bank of India’s second list of 26 major loan defaulters under the Insolvency and Bankruptcy Code. In August 2017, the bankruptcy process was started against them.
2018- The ICICI Bank submitted a petition for insolvency in September 2018. The report states that the aforementioned subject has not been acknowledged or postponed for the past four years.
2022- Jaiprakash Associates currently owes an enormous amount of debt—roughly Rs 27,000 crore. It has made an attempt to convince but failed to persuade its lenders of a restructuring proposal outside the IBC.
Other players who have stakes in this organization-32 banks, including ICICI Bank, Axis Bank, Bank of Baroda, IDBI Bank, and Canara Bank, have holdings to JAL in total. Obligations, including term loans, FCCB, fund-based working capital, and non-fund-based working capital, are in default.
Two more acquaintances from the same group are already being monitored: Jaypee Infratech and Andhra Cement, both members of the Jaypee group, are already through the IBC procedure, and if the Allahabad bench accepts the current one, this will be the group’s third firm.
SBI has asked the court to designate Bhuvan Madan as the interim insolvency person for JAL in Section 7 of the application for CIRP initiation. SBI has asked the NCLT to impose a moratorium on Jaiprakash Associates under the same section of the Insolvency and Bankruptcy Code.
Say from the probable bankrupt institution:
When contacted, Jaiprakash Associates stated that it has liquidated cement facilities to repay the debt and that it will take more layers of effort to resolve the concerns of its lenders. Homes for homebuyers are being built under RERA guidance.
Jaiprakash Associates has been working consistently with the aim of repaying loans, and actions have been taken from time to time to lower loans. “We will continue to address lenders’ concerns,” Jaypee Group Chairman Manoj Gaur said.
The current state of affairs in the aforementioned case
According to persons familiar with the situation, billionaire Gautam Adani’s Adani Group is in advanced talks with debt-ridden Jaiprakash Power Ventures Ltd. to buy its cement unit.
Jaiprakash Associates, a potentially bankrupt corporation, has sold a few cement plants to the billionaire Adani Group. The sale of these firms to the Adani group for Rs 5,000 crore may help the company in avoiding a bankruptcy petition filed by ICICI Bank, one of its 32 lenders, but it will still need to take extra actions to decrease it. The cement grinding plant has a yearly capacity of 2 million tonnes. It commenced operations in Nigrie, Madhya Pradesh, in October 2014.
This helping hand to Jaiprakash Associates is not just a relief for the likely failing corporation, but it is also a win for giant Adani.
The transaction will help to cement the Adani Group’s sudden dominance in the cement sector, which began in May when it purchased Ambuja Cements Ltd. and ACC Ltd. from Switzerland’s Holcim Ltd., becoming India’s second-largest cement manufacturer pretty much overnight with a built production capacity of 67.5 million tonnes per year.
Adani Group announced last month that it wants to increase its cement production capacity to 140 million tonnes in five years and to invest 200 billion rupees in its recently acquired cement company.
This year, the Indian entrepreneur has been in a purchasing frenzy across sectors as he seeks to diversify and extend his conglomerate.
Beyond its traditional foundation sectors of ports and power plants, Adani Group has expanded into fresh fields such as media, cement, health care, and metals.
Billionaire Gautam Adani is expected to invest 200 billion rupees ($2.5 billion) in a cement firm and appoint his son to run it as the world’s third-richest man looks to expand his infrastructure empire, which includes ports, utilities, and power generating.
Edited by Prakriti Arora
