Jaiprakash Associates, the leading company of the Jaypee Group facing financial difficulties, has recently revealed a default on loans totalling Rs 4,258 crore, including both principal and interest amounts. This default, which took place on October 31, involves a principal sum of Rs 1,733 crore and an interest sum of Rs 2,525 crore, owed to several banks. The obligations encompass fund-based working capital, non-fund-based working capital, term loans, and FCCB (foreign currency convertible bonds).
It is worth mentioning that the entire loan, which amounts to Rs 29,272 crore, is currently undergoing restructuring. Additionally, Rs 18,682 crore is expected to be further reduced upon the transfer to the proposed Special Purpose Vehicle (SPV), pending approval of the Scheme of Arrangement by NCLT.
The company has been diligently working towards reducing its borrowings. With the upcoming divestment of the cement business and ongoing restructuring considerations, it is expected that the borrowing will significantly decrease, eventually reaching almost zero with the implementation of the revised plan.
ICICI Bank has initiated the process of seeking assistance from NCLT Allahabad, as mandated by RBI's directive under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2016, regarding Jaiprakash Associates. The company has expressed disagreement with this action, and the issue is currently pending a resolution, alongside the approval of the Scheme of Arrangement for the transfer of real estate to the SPV by NCLT.
It should be mentioned that ICICI Bank and SBI have initiated legal proceedings against Jaiprakash Associates, with SBI claiming a default amount of Rs 6,893.15 crore as of September 15, 2022.
Earlier this year, Jaiprakash Associates and its group entities made the decision to sell their remaining cement assets to Dalmia Bharat Ltd at an enterprise value of Rs 5,666 crore, as part of their strategy to reduce debt. This move comes after previous deals where Jaiprakash Associates had sold over 20 million tonnes per annum of cement capacity to UltraTech Cement between 2014 and 2017.
In a related development regarding its former subsidiary Jaypee Infratech Ltd (JIL), the Mumbai-based Suraksha Group was granted approval from NCLT in March to acquire JIL and finalize the construction of around 20,000 apartments in Noida. Nevertheless, there have been objections raised by several parties regarding this decision, and they have approached the National Company Law Appellate Tribunal (NCLAT).
In conclusion, Jaiprakash Associates is currently taking proactive measures to address its financial challenges by strategically divesting assets and implementing restructuring initiatives, aiming to stabilize its financial position in the coming period.
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