JAYPEE INFRATECH
Jayprakash Gaur, 86, is a rare civil engineer who has lived the entire history of India's post-independence infrastructure building. He has built his business according to one of his famous quotes: “Every time someone tried to explain to me that there are limits to what one man can do, I pointed to the boundless sky and said, there is the limit.”
Pushing the limits has left Jaypee Infratech — with interests in engineering & construction, cement, power and real estate — with humongous liabilities. Bankers, led by IDBI BANK, have taken Jaypee Infratech to the NCLT for bankruptcy proceedings. The company is developing the Yamuna Expressway project between Noida and Agra with township area totalling 25 million square metres. The company did not respond to questions from Business Today.
Over the last three years, the company has been on an overdrive to sell assets – hydropower projects in Himachal Pradesh to Sajjan Jindal’s JSW and cement units to Orient Cement and A.V. Birla’s Ultratech. “We have always worked closely with banks. We divested and reduced liabilities according to their advice,” says an executive, on condition of anonymity.
Bankers say the value of the company’s assets is far more than its debt. “But the value may take a long to mature and, hence, there is a liquidity mismatch,” says a banker.
There is also a view that the banks may take equity as promoters still hold a 72 per cent stake. The market capitalisation of the company is `3,000 crore. But some banks might not be receptive to the idea. “Why should a bank move from a secured position to equity?” says a banker.
The company’s troubles started with the National Green Tribunal’s 2013 ruling staying construction within 10 km of the Okhla Bird Sanctuary. This halted construction of apartments along the Noida-Greater Noida Expressway. The revenue from real estate has fallen drastically in the last two financial years. This resulted in a 60 per cent drop in the company's revenues in 2016/17 from `3,000 crore to less than `1,000 crore.
The lead bank was considering taking over some assets and bringing in a new developer. “There is a huge inventory which can be sold,” says a banker. The resolution looks certain in case of Jaypee Infratech.
With inputs from Sumant Banerji