In its bid, NBCC has promised to deliver flats to homebuyers in four to five years from the transfer date, subject to the availability of the cash flows from the respective projects
Lenders of Jaypee Infratech met on February 18 to discuss the resolution plans submitted by state-owned NBCC and construction company Suraksha Asset Reconstruction Company to take over the realty firm and complete stalled projects, some of which have been delayed by over a decade.
Embattled firm Jaiprakash Associates has for the second time also submitted a proposal to lenders of its subsidiary Jaypee Infratech for settling dues worth Rs 10,000 crore.
Mumbai-based Suraksha group has made an offer of about Rs 20 crore as upfront payment and land worth Rs 5,000 crore. It has promised to complete pending projects in three years.
In October 2018, Insolvency Resolution Professional Anuj Jain started a fresh initiative to revive Jaypee Infratech on the NCLT direction after lenders rejected the over Rs 7,000-crore bid of Suraksha group.
Jaypee Infratech Ltd has an outstanding debt of nearly Rs 9,800 crore, of which Rs 4,334 crore pertains to IDBI Bank. Other lenders are IIFCL, LIC, SBI, Corporation Bank, Syndicate Bank, Bank Of Maharashtra, ICICI Bank, Union Bank, IFCI, J&K Bank, Axis Bank and Srei Equipment Finance.
NBCC bidNBCC has proposed incorporation of an NBCC SPV for the purpose of acquiring a majority stake in the corporate debtor. It has proposed pumping in an upfront amount of Rs 500 crore (part equity and part debt) within 90 days of the approval date to acquire the embattled company, sources say.
Once it acquires the company, the name of the company may also change. Sources say it is too early to speculate what nomenclature it would finally be given.
It has offered 1,400 acre land worth Rs 3,000 crore as well as Yamuna Expressway highway to lenders. NBCC has suggested that banks should raise about Rs 2,000 crore against the expressway and provide half of the amount (Rs 1,000 crore) to the PSU, which will utilise this fund as an upfront payment. NBCC will also fund the gap of about Rs 1,500 crore between estimated construction cost and receivables from customers.
What this means is that the lenders effectively receive Rs 6,000 crore worth of the expressway (from the Expressway SPV) and Rs 3,000 crore for the land bank (from the Land Bank SPV). A total of about Rs 9,000 crore, say sources.
What’s in it for homebuyers?In its bid, NBCC has promised to deliver flats to homebuyers in four to five years from the transfer date, subject to the availability of the cash flows from the respective projects.The delivery of plots will begin in 2020 and most of the villas and apartments are expected to be delivered by 2021 until 2024.
NBCC has proposed that the delay penalty (accrued on account of delay in giving possession of the flats) shall be settled at 25 percent of the amount due prior to the commencement of the CIRP process which started from August 9, 2017. But no penalty shall be paid from the commencement of the process till expiry of the additional moratorium of six months from the delivery dates. Also, if units are not handed over even after six months from the revised delivery dates, the delay penalty at the rate of Rs 5 per sq ft will apply, say sources.
"NBCC will give 25 percent of the delay penalty amount whatever was due from August 9, 2017. If for example, if Rs 5 lakh was due to an individual, NBCC will pay only Rs 1 lakh. If the person’s unit is to be delivered by December 2024 but is delayed, NBCC may pay Rs 5 only from July 1 2025," say experts.
Homebuyers are of the opinion that NBCC is taking far too long to complete the project compared to Suraksha's plan and topping it up with additional 12 to 18 months in every project. Over and above, they are asking for another six months. "These timelines should be open to negotiations," they say.
Lenders expect to submit a representation by next week and are hoping that the company will reduce its timelines and raise the upfront amount to Rs 3000 crore from the existing Rs 500 crore.
NBCC has also said in its proposal that NBCC SPV and the corporate debtor has the right to change the units of the respective homebuyers in Noida and Mirzapur based on future development plans, 'though the resolution applicant will try to ensure that the homebuyer from the respective project is allocated project in the same or the nearby project', sources say.
This say experts, could be to ensure that end-users get priority and are given possession of their units first. "There may be some who may not have filed their claims with the IRP and may have units scattered all over the projects. To ensure that towers get completed fast, the new owner of the company may want to consolidate all those who have submitted their claims and build their towers first. Those people may be required to be shifted in the process," say experts.
It has also submitted that the resolution plan is on a ‘balance cost to complete basis as provided by the Interim Resolution Professional in the information memorandum, Any escalation thereto shall be borne by the respective homebuyers’, sources say.
This say, experts, should be removed as why should buyers be made to pay for the escalation cost when they have already suffered so much and are getting possession after more than a decade.
It has also said in its proposal that the rights of homebuyers who have not filed any claims with the IRP shall be extinguished in perpetuity on and with effect from the approval date and that the units shall also stand cancelled. These will be in the possession of the new SPV thereon.
This say, experts, is to ensure that there are no benami units left in the project. "It is like killing two birds with one stone," say experts.
NBCC also plans to build a financial district on the 3500 acres surplus land with Jaypee Infratech located near the proposed Jewar airport. There is also a proposal to build a sports city along the Greater Noida- Agra stretch of the expressway. Affordable housing, hotels, an entertainment hub may also come up on these land banks.
vandana.ramnani@nw18.com
