Jaypee’s 13,915 houses ready, buyers safe and a promoter hoping for fresh lease

Jaypee Infratech had as on March 31, 2018 completed 13,200 houses, according to the Group’s CEO Manoj Gaur

Tense and uncertain as they are, these are also interesting times at the beleaguered Jaiprakash Associates and its subsidiary Jaypee Infratech. From a situation where everyone looked like losing — be it the promoters or banks or home buyers — has emerged a scenario where there could be more than one winner if not all. One constituency whose fate has suddenly somersaulted — and for good — is the home buyer with both Supreme Court and the Tribunal putting their interests on priority. Understandably so.

Jaypee Infratech, the subsidiary at the centre of trouble, had as on March 31, 2018 completed 13,200 houses, according to the Group’s Executive Chairman and Chief Executive Officer Manoj Gaur.

According to a source clued in on the goings on at the Noida-based group, the company is now ready with 13,915 flats. This includes 9,744 units which have been offered for possession and 4,171 units against whom the offer of occupancy is pending. Of the 9,744 units offered for possession, 5,925 units have been registered.

This is a far cry from Jan 7 when the buyers had to choose between seeking a refund or a finished property. At that time, 11,800 buyers had responded with about 2700 buyers asking for a refund and the rest possession. Two factors have since reversed the scenario.

“It’s very, very unlikely the company will be liquidated. If the group isn’t able to retain control of Jaypee Infratech which is also a possibility, it will go Lakshadweep Pvt Ltd. What is clear is that the company will not sink. Plus with the international airport at Jewar coming up in five-six years, property rates have started to improve. So there are not many buyers who will be looking to encash right away,” another source tracking the insider developments at the company said.

The Supreme Court’s April 16 decision to let the insolvency resolution professional and the committee of creditors decide on Jaiprakash’s bid has lifted the morale of the management. That the Apex court also allowed company directors Pankaj Gaur and Sunny Gaur to travel abroad has also brought some relief to the Gaurs and gives hopes that the worst may coming to a close for the family.

But it may be too early to rejoice. The law doesn’t as such allow the existing promoters to bid for the distressed company and if the National Company Law Tribunal allows it, it might open a Pandora’s box with promoters of other stressed companies asking for the same treatment.

What goes in favour of Jaypee promoters is that the company has solid assets that are in excess of its current liabilities and that Jaiprakash Associates’ original offer — before the company became an NCLT case — was far better than any of the bids being considered by the insolvency resolution professional.

“The law may not allow the Gaurs to bid for Jaypee Infratech but the valuations being offered by the bidders are baffling. The assets are worth much more. The creditors have created scenario one, scenario two and scenario three that show the different haircuts they may have to take. There is no need for a haircut if the Jaypee offer is accepted,” the source first quoted above said.

According to a conservative estimate, the value of the company’s assets should not be less than Rs 20,277 crore. This is derived from the hospital being worth Rs. 500 crore, 167-km Yamuna Expressway Rs. 3,500 crore, 900-acre land parcel near Formula-1 track at the circle rate of Rs 7 crore per acre, 1,225 acres in Jewar at circle rate of Rs 3.34 crore per acre, 1,185 acres near Agra at circle rate of Rs 3.28 crore per acre and 10 million square feet FSI at Noida at Rs 2,000 per square feet.

Jaypee Infratech’s offer included this: 10 percent per annum interest on Rs 3,140 crore of sustainable debt and giving away 448 acres against Rs 2,340 crore of debt as well as an issuance of optionally convertible debentures and conversion of debt into equity.

As far as outside bidders are concerned, the race is now down to two — Lakshadweep and the Adani Group — with the former in the front seat. Lakshadweep is a joint venture between Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Reality. Valia is the brother-in-law of Shanghvi and an executive director on the board of his company, Sun Pharmaceutical Industries. Dosti Realty is a real estate company promoted by Shanghvi’s cousin Deepak Goradia.

As per Lakshadweep’s Rs 7,350 crore offer, it will make an upfront payment of Rs 1,200 crore to the banks. It has marked Rs 4,000 crore against the sale of land and another Rs 2,000 crore to be converted into long-term non-convertible debentures. A small equity stake may also be offered to the lenders.

Adani Group has offered Rs 1,200 crore in cash, Rs 3,500 crore of land parcel and Rs 3,000 crore of back-dated instruments.

“If the bidders are also offering land against cash, then what is the problem with accepting Jaypee’s offer? This is like the right hand taking from the left and giving away. With the airport coming up and the real estate bottomed out, land prices can only improve from here,” the first source said, adding any new player coming in would not be able to deliver the remaining flats before 2022. There are around 16,000 flats left to be delivered.

The 167-km-long Yamuna Expressway, a 525-bed super specialty hospital, a Formula-1 track, more than 3,200 acres that also lie in the city of Taj Mahal are assets to not let go. No wonder then that Manoj Gaur hasn’t stopped delivering on the flats. He is looking to neutralize “the curse of some of the home buyers,” in his own words.

Jaypee Greens offering possession at Jaypee Wish Town