Jaiprakash Associates fails, this time on debt

Jaiprakash Associates, the flagship company of Jaypee Group has revealed to the stock exchanges that it has defaulted on bank loans, interest and statutory payments. The defaulted amount stands at Rs 4539 crores. The company in its filings with the stock exchanges on Thursday said it failed to repay Rs 2,905 crore in principal amount to banks and another Rs 1,558 crore in interest payments. 

The company’s loss for the quarter ended 31 March 2016 has increased to Rs. 1,387.30 crores from Rs. 1,147.32 crores a year ago. This was the eighth straight quarter in which the company has reported a loss.Net sales for Q4FY16 fell by 25.7 per cent as compared to the previous Q4FY15.

The story of the group is not different from its associates, Jaiprakash Power Venture, Jaypee Cement Corporation, Jaypee Infratech, Jaypee Agra Vikas, Prayagraj Power Generation, Madhya Pradesh Jaypee Minerals, Bhilai Jaypee Cement have a total debt of Rs 1559 crores (all company’s put together). Company’s consolidated principal repayment and overdue stands at Rs 4,539.6 crores.

The only lifeline for the group is available if UltraTech takes the bad loan and refinance’s it at the lower interest rate as the Birla group has a better credit rating’s with the banks. For the rest Rs 4,400 crore, UltraTech will take an additional debt which would be raised from its own balance sheet. 

The deal will help Jaypee transfer its loans to UltraTech and bring down its steep finance costs. The shares on the bourses on Friday are trading at Rs 5.38, down by 0.74 per cent on an intraday basis.