Jaiprakash Associates

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2018: group loses control over several businesses

Sidhartha, August 10, 2018: The Times of India

Jaiprakash Associates, as in 2017 and 2018
From: Sidhartha, August 10, 2018: The Times of India

In June 2017, when Jaiprakash Associates (JAL) was identified by the RBI as one of the companies where insolvency proceedings should be initiated, company executives dismissed it as a mistake by the regulator, which was to be rectified soon. But 14 months later, the group has lost control over several businesses, ranging from cement and power plants to golf courses and an F1 track, with a court appointed resolution professional set to take charge.

“We have been the most aggressive in clearing dues to banks by selling off our power and cement assets. Our name will be removed soon,” a top executive had said. But that did not happen, prompting Jaiprakash Gaur, the patriarch and founder, to return to the company’s board three months ago to steer it out of its biggest crisis.

Gaur, 87, holds a diploma in civil engineering and started as a junior engineer before setting the company to venture into construction of hydel power projects.

Soon, the group was running hotels, building a golf course in Greater Noida, along with high-end apartments and operating power plants. His family members reckon that a fast-paced expansion, which saw the group venturing into cement, real estate businesses and even Formula 1, proved to be its undoing. The diversification came with a massive pile of debt, which added up to over Rs 25,000 crore, but the group did not have sufficient revenue to repay loans.

NCLT to appoint RP for JAL

Also, a change of leadership in UP added to the group’s woes. Akhilesh Yadav’s Samajwadi Party was seen to be holding up clearance for the Taj Expressway that connects Greater Noida with Agra. But that did not deter lenders led by ICICI Bank and IDBI Bank from sanctioning more loans to the group.

While Jaypee Infratech was under insolvency action for a year, now it’s the turn for parent Jaiprakash Associates too, an action that was held back due to a stay by the Supreme Court. “It’s all gone, from hotels and golf courses to the cement and power plants,” said a banker, after the apex court gave its go ahead on Thursday. With SC clearing the deck for an insolvency resolution, NCLT will now appoint an insolvency resolution professional to sell the company.