Major news has emerged from the JP Group in the stock market. The Supreme Court's decision on the Noida Sports City land dispute may now impact investors' strategies.
Jaiprakash Associates Ltd (JAL), once a favorite of investors in the stock market, is now on the verge of being sold. The company's share price once reached ₹538, but due to debt and a लगातार गिरती साख, it is now trading around ₹3. The situation has reached the point where bids are being invited under the company's bankruptcy process, with Dalmia Bharat making the largest offer.
Who is the highest bidder?
Dalmia Bharat has bid ₹14,600 crore for Jaiprakash Associates. However, this offer is based on a condition. This condition is related to the controversial Sports City land in Noida, on which legal disputes are pending in the Supreme Court. If the court's decision goes against JAL, Dalmia Bharat may reduce its offer by up to ₹2000 crore.
Land dispute becomes the biggest hurdle in the deal
The dispute over approximately 1,000 hectares of land began in 2023 when the Yamuna Expressway Industrial Development Authority (YEIDA) canceled the allocation of JAL's land. The Allahabad High Court also upheld this cancellation, which JAL has challenged in the Supreme Court.
Now, the matter is pending in the Supreme Court and the conditions of all bidding companies also depend on this legal decision.
Offers from other major companies
- Not only Dalmia Bharat, but many large companies in the country are in the fray to buy Jaiprakash Associates.
- Vedanta Group has bid ₹13,600 crore, but has kept the offer on hold until the court's decision.
- Adani Group has offered ₹12,250 crore, including a portion to be given through NCDs within four years.
- Jindal Power has offered ₹10,300 crore.
- PNC Infratech has offered the lowest bid of ₹9,500 crore.
One thing is common in all these bids: all are based on some legal or corporate condition.
Heavy debt on the company, NARCL becomes the largest lender
The total debt on Jaiprakash Associates has reached ₹57,185 crore. National Asset Reconstruction Company Limited (NARCL) is the largest lender in this process. This is why all the offers coming in to buy JAL have been made keeping in mind the recovery of this heavy debt and the distribution of assets.
What assets does JAL have?
Although the company's financial condition is bad, it still has many important assets, which are attracting large business groups. These include:
- Cement plants
- Real estate projects
- Toll roads
- Power plants
Apart from these, the most talked-about asset is Noida Sports City, which is now embroiled in controversy.
The path ahead depends on the Supreme Court's decision
Now, the entire matter hinges on the Supreme Court's decision. If the court cancels the land cancellation action by YEIDA, the deal of Dalmia Bharat may proceed and JAL may get a new lease of life.
But if the decision goes against JAL, there is a possibility of changes in all the bids, including Dalmia's. It is possible that a bidder may withdraw its offer or make a significant reduction in the amount.
Lenders are now in talks with all the bidders and a final decision on the final proposal may be taken soon.
