Jaiprakash Associates bid: Vedanta offers Rs 4,000 cr upfront payment, rest over 5-6 years

New Delhi, Sep 7 (PTI) Mining conglomerate Vedanta Ltd in its winning bid for debt-laden Jaiprakash Associates Ltd (JAIL) has offered Rs 4,000 crore payment post approval by NCLT and the balance amount over the next 5-6 years, sources said.

Vedanta beat Adani Group with a bid whose net present value comes to Rs 12,505 crore in an auction carried out by lenders to find suitors for JAL, whose interests span real estate, cement, power, hotels and roads.

JAL is undergoing CIRP under the IBC process and the Resolution Professional invited Resolution Plans on June 24. As a part of the same process, a challenge process was conducted among the five bidders (Vedanta, Adani, Dalmia, Jindal Power and PNC Infratech), wherein Vedanta emerged as the H1 bidder at the NPV value of Rs 12,505 crore.

Sources said Vedanta was identified as the H1 bidder for Jaiprakash Associates Limited (JAL) by the NARCIL-led Committee of Creditors (CoC).

"The entire pay-out is expected to be made in a staggered manner, wherein the first part of the payment is expected to be around Rs 4,000 crore, which will be post NCLT approval. This could easily take anywhere around a year, and the timeframe for the remaining payment would be approximately 5-6 years," said a person familiar with the bid terms.

Sources said given that the entire pay-out is staggered over 5-6 years, it will be funded by Vedanta's balance sheet, and supported by corporate debtor's (JAL) internal accruals, without any overdependence on Vedanta's balance sheet alone, which generates free cash flows.

Though Vedanta has been identified as H1, the CoC is yet to conclude the process and vote on the successful resolution plan, which is estimated to take another four to eight weeks. Post this, implementation of the plan will take another three to four months.

JAL has an unpaid outstanding of Rs 55,371.21 crore as on August 15, according to a stock exchange filing of the company.

Vedanta emerged as the H1 bidder by offering a payment of Rs 12,505 crore based on a Net Present Value (NPV) basis. In auction processes like this, where the payment terms are staggered over the next few years, the offered amount is measured on NPV method, as that is capital budgeting technique that evaluates the profitability of a project or investment by comparing the present value of future cash inflows to the current cost of the investment, also known as 'time value of money' in accounting terms.

JAL, which has five key verticals (power, real estate, cement, hotels and EPC), complements Vedanta's businesses such as power (already present and has a sizable portfolio including Talwandi Sabo and Meenakshi Energy).

"Vedanta will realize its synergies in JAL's assets through its experience in metals, mining and power and will also tap the potential of JAL's limestone and coal mines. Further, once Vedanta's power business is demerged, the power business from JAL will add heft to it. The real estate assets also have development potential through partnerships," sources added. PTI ANZ HVA