Jaiprakash Ind Seeks Nod To Mortgage Mussoorie Resort

The Rs 996-crore Jaiprakash Industries will seek shareholders approval to mortgage its holiday resort at Mussoorie, the Residency Manor, as security against loans to financial institutions to obtain funds at a cheaper rate of interest.

The move follows the managements decision to replace high cost debt with low cost borrowings and repay loans not exceeding Rs 50 crore inclusive of interest, cost, charges expenses and any other money payable by the company.

The deluxe holiday resort is being run by Jaypee Hotels on a lease arrangement. The company has initiated a move to hive it off to a new company.

 

Jaiprakash has decided to seek shareholders approval to mortgage assets to the Industrial Finance Corporation of India (IFCI), Industrial Development Bank of India (IDBI), the Industrial Credit & Investment Corporation of India Ltd (ICICI), SCICI Ltd, Industrial Reconstruction Bank of India (IRBI), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and its subsidiaries.

The company has obtained an additional rupee term loan of Rs 49.90 crore from IFCI, about Rs 27 crore from IDBI, nearly Rs 18 crore from ICICI, about Rs 7 crore from SCICI, IRBI and LIC each, and another Rs 3 crore from GIC and its subsidiaries to finance its grassroots cement plant with dry process kiln being set up near the existing cement unit at Jaypee, district Rewa.

Jaiprakash Industries project to set up the Jaypee Bela Cement unit III near the existing plant has been reassessed by financial institutions at Rs 475 crore. Institutions have already agreed to finance the cost overrun of Rs 82 crore.During 1996-97, the company obtained yet another short-term loan of Rs 20 crore from IFCI to meet the requirements of its working capital margins.

Jaiprakash Industries has also made a private placement of 18 per cent NCDs of Rs 50 crore with IDBI to augment its long-term working capital resources.

The NCDs will be redeemable in three equal installments of Rs 15 crore, Rs 15 crore and Rs 20 crore respectively from September 30, 1998.

The management is making efforts to hive off Jaypee Bela Cement, the new cement plant which commenced clinker production from October 1996, to a new company. It also considering various proposals for disinvestment or financial tie-ups for the new plant.

The company issued 4,387 equity shares of Rs 10 each as bonus and another about 940 equity shares of Rs 10 each at a premium of Rs 50 per share as rights against the entitlement of the respective shareholders which were kept in abeyance in terms of Section 206A of the Companies Act, 1956.

Due to its need to conserve its resources and meet enhanced working capital requirements, the company did not to declare a dividend for the year ended March 31, 1997.