On May 23, the Chairman of Jaiprakash Associates (JAL) Manoj Gaur wrote a letter to the IRP, urging him to consider JAL's settlement offer, which was submitted before the Supreme Court in 2019.
On June 23, the financial creditors of Noida-based Jaypee Infratech Ltd. selected Suraksha Group of Mumbai over state-owned NBCC to take over the debt-laden developer and complete the unfinished 20,000 odd-apartments.
What is it that the company gets to inherit from the embattled firm JIL and what is it that it brings to the table?
A committee of creditors’ (CoC) member told Moneycontrol that the liquidation value of Jaypee Infratech Ltd was pegged at Rs 17,000 crore. Suraksha Group had valued the company at Rs 7736 crore while NBCC had valued it at Rs 6536 crore in their respective resolution plans. The entire land that Suraksha will get as part of the deal is expected to be around 6200 acres, the member said.
After paying of institutional financial creditors with these land parcels, the company would be left with around 800 acres of land, the member said.
Suraksha after paying off the banks and other lenders also gets to inherit Yamuna Expressway, the value of which ranges from Rs 3,000 to Rs 4,000 crore, the member said.
Unlike the resolution plan proposed by the government’s construction arm NBCC, the company has not decided to hive off the Yamuna Expressway but had said that this was dependent on approval of YEIDA.
The amount required for construction of the entire project is around Rs 6000 crore of which Rs 2,800 crore would come from receivables from homebuyers and Rs 1200 crore would be obtained by disposing of unsold inventory.
Read: Suraksha Group gets approval from lenders and homebuyers to take over Jaypee Infratech
A deficit of Rs 2000 crore would be met from internal accruals to complete construction, the member said.
It must be remembered that as many as 12 banks and more than 20,000 homebuyers have voting rights in the Committee of Creditors (CoC). Homebuyers and creditors have 56.63 per cent and 43.25 per cent voting rights, respectively. Fixed deposit holders have 0.13 per cent voting rights. Lenders had submitted a claim of Rs 9,783 crore and the total admitted claims of the banks is ₹9,782 crore, the member said.
Under its plan, Suraksha ARC has proposed to infuse Rs 125-crore worth equity into Jaypee Infratech. It also said that it will avail Rs 3,000 crore in loans to complete construction of the residential units which have been pending for over a decade. It plans to finish construction work within 42 months after taking over Jaypee Infratech.
Suraksha Group has also promised to immediately infuse Rs 300 crore if its bid was approved by the CoC to ensure construction is not hampered while awaiting the NCLT’s approval of the resolution plan. A CoC member told Moneycontrol that the company hopes to complete around 5000 housing units with this amount.
The company had also promised to form a project wise Monitoring Committee to monitor the progress of construction work and to oversee how funds are being deployed. It has also proposed to develop a mobile application to provide regular construction updates to buyers, the CoC member said.
A separate escrow account had also been proposed for each project as stipulated under RERA wherein funds from homebuyers would be collected and construction costs borne, the member said.
All that you need to know about the Suraksha Group
During the voting on the NBCC and the Suraksha resolution plans to take over Jaypee Infratech from June 14 to June 23, 2021, the Suraksha Group received 98.66 percent of the votes compared with NBCC’s 98.54 percent. Voting started on June 14 and ended on June 23. This was the fourth round of bidding to find a buyer for Jaypee.
Jaypee Infratech said in a regulatory filing that Suraksha Group received 41.91 percent of the votes from 12 banks out of their total voting rights of 43.25 percent, while NBCC got 41.79 percent of the votes from institutional financial creditors, which have submitted claims of Rs 9,783 crore.
All banks, barring ICICI Bank which had a 1.34 percent vote, were in favour of Suraksha Group. Two lenders voted against NBCC’s bid – ICICI Bank and Srei Equipment Finance Ltd. (0.12 percent vote share).
Both Suraksha and NBCC received the full 56.62 percent and 0.13 votes of homebuyers and FD holders, respectively. Srei’s vote in favour of Suraksha and against NBCC proved to be decisive in the final decision.
As per the company's website, Suraksha Asset Reconstruction Ltd (Suraksha ARC), formerly know as Suraksha Asset Reconstruction Private Limited, is an Asset Reconstruction Company with the Reserve Bank of India under section 3 of SARFAESI Act, 2002. It commenced the business on September 29, 2016.Also Read: Jaypee Infratech case: Here’s a look at the Suraksha Group and NBCC bids
The company is held by Sudhir Valia who is related to the Sun Pharma promoter and managing director Dilip Sanghvi. It also specialises in distressed assets. It has so far constructed and delivered 12 projects including residential and commercial projects.
The total constructed or delivered and even those under construction or in the planning stages projects are spread across more than 6 crore sq. ft. In Mumbai and Thane, the company is developing the Suraksha Smart city which comes under PMAY scheme. Over 50,000 housing units are expected to come up in this project, the CoC member told Moneycontrol.
The company is also in the business of turning around stuck projects and has close to 18 such projects spread across Gurgaon, Agra, Ghaziabad, Meerut and Indore. These are spread across more than 2 crore sq ft and include both residential and commercial, the member said.
The stuck projects in its kitty include Unitech, Ansals and Ramaprastha in Delhi-NCR. The company has so far invested Rs 500 crore in Suraksha ARC for turning around these 18 projects, the member said.