Sale of cement units to Adani group a relief for Jaiprakash lenders

The sale of cement units by Jaiprakash Associates to the Adani group will provide partial relief to Indian lenders, which have an exposure of Rs 28,648 crore (until September this year) to the company and its various infrastructure projects.

Of this amount, the company has defaulted on Rs 3,798 crore, according to the company’s filing for the September quarter. The sale of its few cement units to the Adani group at an enterprise valuation of Rs 5,000 crore will help the company thwart a bankruptcy petition filed by ICICI Bank, one of its 32 lenders, but it will still have to take additional steps to reduce its debt, bankers said.

The company has sold assets worth Rs 30,875 crore to repay lenders since 2017, including power assets to the JSW group and cement assets with a total 22.4 mtpa capacity to UltraTech Cement. The company still owns another 10.55 mtpa of cement capacity and has put this capacity on sale. Details of the sale of specific assets to the Adani group are still awaited.

“The company has taken steps to sell assets in the past and the latest sale of cement capacity shows that it is serious about avoiding bankruptcy. The group’s real estate company, Jaypee Associates, has been facing bankruptcy for the past four years, with litigation still going on at the National Company Law Tribunal,” said a lender. "The entire process was delayed due to the pandemic," he said.

In June 2017, lenders agreed to divide the company's debt into three parts. While the first part of the debt of Rs 11,689 crore was settled in 2017 with the sale of its cement plants to UltraTech Cement, another part of the debt of Rs 6,367 crore continued in the company’s books. 

According to the company, another bucket of debt worth Rs 11,833 crore was to be transferred to a Special Purpose Vehicle (SPV), Jaypee Infrastructure Development, along with identified land of the company. This debt was to be serviced by the new SPV and is awaiting the NCLT’s clearance.

Lenders said they are still awaiting the resolution of a debt worth Rs 21,658 crore with Jaypee Infratech -- the real estate arm of the group. The Suraksha group was declared the winner of the company in June 2021 but the litigation is still continuing at the NCLT. Jaypee Infratech owns large tracts of land on both sides of the Yamuna Expressway, apart from the expressway. "We are expecting the NCLT to take a decision soon on this matter," said a member of the committee of creditors of the company.

An email sent to the Jaiprakash group did not elicit any response.