 "Manoj Gaur")
Jaypee Chairman Manoj Gaur loves challenges. These days he is busy dealing with the aftermath of the group's unbridled expansion over the past decade. The engineering and construction company started by his father Jaiprakash Gaur is saddled with a mountain of debt because of its expansion into cement, power, hospitality, real estate and a host of other unrelated fields.
At Rs 63,000 crore, the debt is giving sleepless nights to creditors. Last month, the group informed investors that it had broken loan agreements. But Gaur, 50, is holding steady under the burden. He is looking for buyers to sell some of the group's assets, and leading the charge from the front.
Gaur's problems started with the group's ambitious foray into real estate and several high-cost projects like the Yamuna Expressway and Buddh International Circuit (where the Indian edition of the Formula-1 Grand Prix is held). The group went into hospitality in the early 1980s when New Delhi was preparing to host the Ninth Asian Games. Two hotel properties came up in quick succession in Delhi. A third hotel in Mussoorie and a golf course at Greater Noida followed. However, hospitality could never become big for the group. These showpiece projects dried up the company's cash flows causing it to default on its financial covenants, including financial ratios, asset coverage ratios, interest coverage ratios, and debt-to-equity ratios among others, forcing Gaur, who took charge from his father in 2006, to consider selling assets. Earlier this month, he closed a qualified institutional placement of 213 million shares of Rs 2 each at an issue price of Rs 70.27 to ease the company's cash flow.
Insiders say Gaur - a deeply religious person - has always led from the front. "Gaur has a great memory and remembers people with their first name. Whether it is raising funds from stock markets or negotiating with the bankers, he always leads the team," says a banker who dealt with the company in the past.
Last week, the Jaypee group sold off its hydro power assets to Anil Ambani's Reliance Power in a deal valued at Rs 12,000 crore (the valuation has not been formally revealed). This came within months of the group divesting 74 per cent stake in Bokaro Jaypee Cement to Dalmia Cement (Bharat) for Rs 689 crore. Last year, Gaur struck a deal with Kumar Mangalam Birla's Ultratech Cement for its cement plant in Gujarat at an enterprise value of Rs 3,800 crore. Bankers say more assets are likely to go on the block. Among them, they say, could be the group's cement plants in Himachal Pradesh and Rewa in Madhya Pradesh.
Many say while the group's debt problems are formidable, what could work to its advantage is Gaur's strong networking skills. Gaur has great equations with politicians across the spectrum. His closeness to former Uttar Pradesh Chief Minister Mayawati was instrumental in the successful execution of the Rs 11,000-crore Yamuna Expressway between Delhi and Agra. He is also believed to be close to Samajwadi Party chief Mulayam Singh Yadav and several key members of the Bharatiya Janata Party.
Gaur, a BITS-Pilani graduate, is also not new to troubles. In 2008, when he was the president of the Cement Manufacturers Association, the cement industry was accused of cartelisation by then Finance Minister P Chidambaram. However, instead of shying away from the issue, Gaur had said that the cement companies which had been served notices by the Monopolies and Restrictive Trade Practices Commission would work to address the issue.
Many say with his resolve to get to the bottom of a problem, a leaner balance sheet, and improving prospects for the economy, Gaur's good days could just be round the corner.
