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Friday, Feb 22, 2002

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Loans for hydro-power arm -- Jaiprakash Ind to offer itself as collateral

Kohinoor Mandal

KOLKATA, Feb. 21

IN an attempt to bail out the Baspa-II hydel project in Himachal Pradesh, Jaiprakash Industries has decided to offer itself as collateral security for fresh term loans worth Rs 167 crore from banks and financial institutions to its subsidiary, Jaiprakash Hydro-Power Ltd.

The project, being implemented on a build-own-operate (BOO) model, has suffered a substantial cost and time overrun due to the flash floods on the Sutlej River in Kinnaur district.

While the project cost has increased to Rs 1,612 crore from Rs 1,345 crore, the time overrun has been around 15 months. Earlier, January 2002 was scheduled for the commissioning of the project.

Banks and financial institutions led by ICICI have agreed to bail out the project by giving additional term loans of Rs 167 crore provided the parent company, Jaiprakash Industries, stands guarantee as a collateral security. The board of the parent company agreed to do so in its meeting held on December 27.

Corporate sources said Central Bank of India had agreed to sanction a fresh loan of Rs 50 crore. Moreover, State Bank of Patiala and State Bank of Indore would each give 25 crore.

Jaiprakash Industries is also giving corporate guarantee to a balance term loan of Rs 67 crore and a payment guarantee assistance of $2.62 million, which is to be sanctioned by Bank of India and a few other banks and financial institutions.

The sources said the company had decided to extend its pledging of Jaiprakash Hydro-Power shares and would acquire more shares of its same subsidiary for pledging in favour of banks and financial institutions.

``The board has authorised the extension of pledge of 17.49 crore equity shares in Jaiprakash Hydro-Power held by Jaiprakash Industries. Of the remaining shares held by the parent company, another 8.50 crore shares will be pledged.

Moreover, Jaiprakash Industries will acquire another 9.60 crore shares for fresh pledging in favour of the banks and financial institutions on a pari-passu basis,'' the sources said.

Jaiprakash Industries has already sought the permission of the minority shareholders on these corporate decisions, which it had to take due to the ``force majeure conditions created by the flash floods in the river Sutlej''. The letter also stated that access to the project site was also disrupted due to these floods.

Meanwhile, the Jaiprakash group has recently initiated a restructuring programme, whereby the promoters' stake in Jaiprakash Industries will go up by 4.68 per cent from 42.18 per cent to 46.86 per cent.

Industry sources said that for the year ending March 31, Jaiprakash Industries is expecting to record a turnover of Rs 1,450 crore and a profit before tax of Rs 160 crore.

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