Real Condition of Real Estate in India - The fall of Jaypee Group-
The Real Bankruptcy…
It isn’t Jaypee Group as a whole that has declared bankruptcy but the real estate group of Jaiprakash Associates, Jaypee Infra tech Ltd which was responsible for a number of construction activities and major infrastructure development under the banner of Jaypee Group got bankrupt.
Promises it Made and Delivered…
The group is commonly known by the title Jaypee Builders and has done an outstanding job on projects like the Yamuna Expressway and the F1 Circuit in Greater Noida. The company also took a leap forward when it introduced the projects Jaypee Wish Town (commonly known as Jaypee Greens) and Jaypee Sports City and showed a gradual yet promising start by building India’s largest golf course (18+9 hole), Jaypee Medical Centre, IT Sector opposite Jaypee Hospital, Adobe Building and some minor yet crucial accomplishments such as Rental Shops and thousands of Ready-to-Move -in Apartments in walking vicinity.
Fall of Jaypee Infratech…
Almost a decade ago, the company had proposed to build 32000 flats and some plots under the revolutionary Integrated Wish Town project located in Sectors 128, 129, 131, 133 & 134 along the Noida - Greater Noida Expressway. But due to piling losses from its other projects such as the unused Formula One Circuit, ban on ground water extraction for construction by National Green Tribunal, fund crunch and issues related to environmental clearance.
The integrated housing project showed no signs of residencies close to delivery for a majority of buyers even after 90 percent of cost payment to the builders.
The integrated housing project showed no signs of residencies close to delivery for a majority of buyers even after 90 percent of cost payment to the builders.
Also with the delay in possession of flats, the buyers conducted protests and filed a case of cheating at Police Station.
Then the executive chairman and CEO of Jaypee Group, Manoj Gaur, stepped in to assure the agitated home buyers of delivery of all housing units in the next three years, but the announcement came in too late and the poor buyer response had already driven out a majority of potential buyers while hundreds requested refund, leaving constructors with depleted budgets and insufficient money to complete their projects.
Then the executive chairman and CEO of Jaypee Group, Manoj Gaur, stepped in to assure the agitated home buyers of delivery of all housing units in the next three years, but the announcement came in too late and the poor buyer response had already driven out a majority of potential buyers while hundreds requested refund, leaving constructors with depleted budgets and insufficient money to complete their projects.
Declaration of Bankruptcy…
In today’s date, Jaypee Infrastructure is saddled with a total debt of Rs 8,000 crore. It owes IDBI alone Rs 526 crore. In response to a decision taken by RBI and the government to clean up the Indian Banking System of its massive NPAs (Non-performing Assets) problem, IDBI Bank filed a petition under Section 7 of Insolvency and Bankruptcy Code 2016 which was admitted by the Allahabad bench of NCLT (National Company Law Tribunal) followed by appointment of Anuj Jain as the interim CEO to revive the company in a period of six months plus three months extension if needed.
Current Condition…
Jaypee has sold several assets, including its cement plants to Ultra tech Cement and power plants to JWS Energy to reduce its massive pile of loans and raise funds to complete the long held-up real estate projects.
In worst case scenario, if at the end of the nine months resolution period, nothing materializes, the company goes into liquidation automatically and interest of the banks will be prioritized over the interest of flat buyers.
In worst case scenario, if at the end of the nine months resolution period, nothing materializes, the company goes into liquidation automatically and interest of the banks will be prioritized over the interest of flat buyers.
Jaypee group has offered 2,000 equity shares of Jaypee Infra tech for free to each home buyer as part of its Rs 10,000 crore proposal to revive the bankruptcy-hit real estate firm.
Apart from that group proposed to bear 50 per cent of stamp duty on behalf of the home buyers on first registration, they said adding the company plans to deliver all apartments in the next 42 months.
Jaypee Infra tech will also pay penalty to home buyers as per the agreement and new law RERA.
Jaiprakash Associates has already deposited Rs 750 crore with the Registry of the Supreme Court and the amount would be utilized for refund to home buyers.
Recently, lender of Jaypee Infra tech rejected a Rs 7,350 crore bid by Lakshadweep, the highest bidder for the company, as they found it inadequate.
This is not the only jaypee groups condition, but its same for nearly all other real estate companies. Previously the real estate business or investment was profitable but since 5 to 6 years, everything is changed.
This is not the only jaypee groups condition, but its same for nearly all other real estate companies. Previously the real estate business or investment was profitable but since 5 to 6 years, everything is changed.
