From F1 track to cement units, promoters of JAL lose it all
In June 2017, when Jaiprakash Associates (JAL) was identified by the RBI as one of the companies where insolvency proceedings should be initiated, company executives dismissed it as a mistake by the regulator, which was to be rectified soon. But 14 months later, the group has lost control over several businesses, ranging from cement and power plants to golf courses and an F1 track, with a court appointed resolution professional set to take charge.
“We have been the most aggressive in clearing dues to banks by selling off our power and cement assets. Our name will be removed soon,” a top executive had said. But that did not happen, prompting Jaiprakash Gaur, the patriarch and founder, to return to the company’s board three months ago to steer it out of its biggest crisis.
Gaur, 87, holds a diploma in civil engineering and started as a junior engineer before setting the company to venture into construction of hydel power projects.
Soon, the group was running hotels, building a golf course in Greater Noida, along with high-end apartments and operating power plants. His family members reckon that a fast-paced expansion, which saw the group venturing into cement, real estate businesses and even Formula 1, proved to be its undoing. The diversification came with a massive pile of debt, which added up to over Rs 25,000 crore, but the group did not have sufficient revenue to repay loans.