Jaypee Associates reveals default on Rs 4.5k-cr debt

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For the first time, Jaiprakash Associates, the flagship company of the Jaypee group, has revealed it defaulted on bank loans, interest and statutory payments to the tune of Rs 4,539 crore.

In its filings with the stock exchanges, the company said it failed to repay Rs 2,905 crore in principal amount to banks and another Rs 1,558 crore in interest payments. The company reported a loss of Rs 3,240 crore on revenues of Rs 8,794 crore - thanks to the slowdown in the infrastructure sector. In February this year, Jaypee sold off its cement unit with a capacity of 17.2 mtpa to Aditya Birla group's Ultratech at an enterprise value of Rs 15,900 crore. The transaction, which is currently pending, would help the firm to bring down its Rs 60,000-crore debt to a more manageable level.

The group's firm, Jaiprakash Power, had earlier sold off its hydro power projects to JSW Energy for Rs 9,300 crore. In September last year, it also sold its Bina power project to JSW for Rs 3,500 crore.

Post the cement unit sale deal, Jaypee will continue to have 10.6 mtpa of cement capacity in Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka.

"We have time and again shown our will to take proactive steps to tide over these turbulent times caused by the economic slowdown," Jaypee Chairman Manoj Gaur had said on April 1 this year soon after signing the transaction with the Birlas.

The lifeline deal for Jaypee will include UltraTech taking over Jaypee's Rs 11,500-crore debt and then re-financing it by its own banks at lower rates because of the Birla group's better credit rating. For the rest Rs 4,400 crore, UltraTech will take an additional debt which it would raise on its own balance sheet. The deal will help Jaypee transfer its loans to UltraTech and bring down its steep finance costs.

The group fell into a debt trap after its foray into infrastructure, real estate and construction of a Formula 1 race course failed to generate money. It had blamed the worsening performance of core sectors and a shaky economy for the fall in financial metrics. In the past two years, it was aggressive in selling assets to raise about Rs 22,000 crore, but debt levels are estimated to be still up 18 per cent over the past two years. The asset sales to UltraTech included another 8.4 mtpa of cement capacity in Gujarat for Rs 5,000 crore.