(SAIL) has called for an investigation into the affairs of Jaiprakash Associates in a suit filed at the National Company Law Tribunal (NCLT) where it has accused the Jaypee Group flagship company of irregularities at a cement manufacturing joint venture (JV) that the two companies operate, according to sources briefed on the matter.
Jaypee Group has denied all the charges.
SAIL is the minority partner in Bhilai Jaypee Cement, a 74:26 JV formed in 2007 during the first term of the United Progressive Alliance government (UPA-I) that brought the public sector steel giant and the diversified Jaypee Group into a collaboration because the steel making process results in generation of slag, a by-product that acts as raw material for cement manufacturing.
According to sources familiar with the contents of the lawsuit, SAIL has accused Jaiprakash Associates of pledging shares of Bhilai Jaypee Cement without its authorisation to Yes Bank for loans that were obtained by other Jaypee Group companies.
SAIL wants an investigation to identify how the transactions took place without its knowledge and if more such dealings have been concealed from it.
It has also accused Jaiprakash Associates of shareholder oppression and mismanagement of the affairs of the JV. A SAIL executive confirmed the developments to ET when contacted.
“Please note that we have submitted our reply before hon’ble NCLT, with a copy to the petitioner, inter-alia, denying the allegations contained in the petition filed by SAIL,” Jaypee Group said in an emailed response.
SAIL is being represented by additional solicitor general Madhavi Divan while Jaiprakash Associates is being represented by senior advocate RP Agarwal in the court proceedings.
Bhilai Jaypee Cement was one of two JV’s formed between SAIL and the Jaypee Group in 2007.
The other JV, Bokaro Jaypee Cement, was sold to Dalmia Bharat group for Rs 1,150 crore in 2014.
Jaypee Group had got an offer to sell its entire shareholding in Bhilai Jaypee Cement to the CK Birla Group for Rs 2,000 crore around four years ago but that deal fell through.
Bhilai Jaypee Cement has manufacturing units in Bhilai and Satna with a production capacity of 2.2 million tonnes per annum.
Jaypee Group sold most of its cement manufacturing units to Aditya Birla Group firm UltraTech Cement in 2017 in a Rs 17,000 crore deal to reduce its debt burden. The group has been under a debt realignment plan in consultation with its lenders for the past four years. Jaiprakash Associates is in the business of construction of large infrastructure projects such as power plants, highways, dams, canals and bridges. Jaypee Infratech, a group company involved in real estate development, is undergoing insolvency proceedings. The company also has a power generation business and operates hospitals and five star hotels.
Source: Economic Times