Suraksha Group Infuses ₹125 Crore into Jaypee Infratech

Suraksha Group invested ₹125 crore in Jaypee Infratech Limited (JIL), providing hope to over 20,000 homebuyers who had invested in halted projects.

Equity Infusion to Accelerate Construction

This investment, made in the form of promoter’s equity, signifies a critical step towards expediting construction work on unfinished projects. Suraksha Group, which emerged as the successful bidder through the National Company Law Appellate Tribunal (NCLAT) process, is committed to timely project delivery.

NCLAT Approval and Compensation to YEIDA

On May 24, 2024, NCLAT approved Suraksha Group’s resolution plan. This plan includes compensating YEIDA (Yamuna Expressway Industrial Development Authority) with ₹1,335 crore over the next four years to address farmer concerns.

Enhanced Compensation for Farmers

Suraksha’s revised plan, submitted in April, proposes a higher compensation amount for YEIDA compared to their initial offer. The revised plan structures the payments as 10% within 90 days, 15% by year-end, and 25% annually for the following three years.

New JIL Board Appointments

Suraksha Group’s Sudhir V Valia has joined the JIL board as a non-executive director. Additionally, Aalok Champak Dave has been appointed as executive director, and Usha Anil Kadam takes on the role of independent director. Devang Pravin Patel has also been approved as the company’s new chief financial officer.

A Long-Awaited Resolution

JIL’s insolvency case dates back to August 2017, when it was among the first companies referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). The process has been a lengthy one, marked by multiple rounds of bidding, lawsuits, and frustration for both lenders and homebuyers. The stalled projects primarily consist of residential towers in Noida and Mirzapur.

Resolution Approval and Debt Details

After a court-monitored process exceeding 5 years, the Committee of Creditors (CoC) finally approved SurakshaARC’s bid in June 2021. JIL owes a total of ₹22,600 crore to lenders and homebuyers, with homebuyers contributing over half the debt (₹12,714 crore) and lenders holding the remaining ₹9,234 crore.

Shifting Landscape and Revised Offer

In January 2024, a significant development occurred when banks led by IDBI Bank sold their debt to the National Asset Reconstruction Company Limited (NARCL). This marked the first acquisition for the government-backed bad loan aggregator. NARCL offered ₹3,570 crore, the highest bid received so far.

Suraksha Group’s revised resolution plan further bolstered the offer to institutional creditors by ₹1,298 crore, bringing the total offer to ₹7,736 crore. This revised plan ultimately secured their position as the winning bidder, edging out competitor NBCC.

Looking Ahead

The Suraksha Group’s investment and commitment to project completion offer a long-awaited sigh of relief for homebuyers. With a new board in place and a clear roadmap for construction, the future appears brighter for those invested in Jaypee Infratech’s stalled projects.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.