For the promoters of Jaypee group, the aggressive expansion during the last decade has cost them dearly. The Delhi-based group had to sell profitable assets to remain afloat even as banks, alarmed by its defaults, are pressurising the group to put more assets on the block, writes the Business Standard.

A senior banker with Mumbai-based public sector lender said the intent of Jaypee group to reduce debt level is genuine as evident from the sale of operating key operating assets like power plants and cement business. “But still more has to be done to bring down debt level to sustainable level," he commented.

Analysts said the group wanted to grow too fast with diversification in real estate and infrastructure sector without worrying about any slowdown.

For bankers the biggest worry is that the company's revenues and profits are falling faster than the debt obligations despite recent asset sell-off. For example, in FY16 Jaypee consolidated revenue was down 14 per cent YoY while operating profit was down 32.4 per cent. In comparison, company's consolidated debt declined by only five per cent last fiscal while interest obligations were up four per cent in the same period.

"This is what happens in a fire sale. You are forced to sell the most liquid and cash-rich assets and you are left assets with few buyers. This is what is happening with Jaiprakash Associates pushing the company even deeper into a debt trap," says G Chokkalingam, founder & CEO Equinomics Research & Advisory.

In February this year, Jaypee sold its cement unit with a capacity of 17.2Mta to Aditya Birla group’s UltraTech at an enterprise value of approximately INR15,9000m (US$235.4m). The deal is not closed yet. Its subsidiary, Jaiprakash Power sold its hydro power projects to JSW Energy for about INR93,000m. In September last year, the company sold its Bina power project to JSW for INR35,000m. It had sold its 74 per cent stake in Bokaro Cement to Dalmia for INR6680m in November 2014 and its cement grinding unit in Haryana to Shree Cement in April 2015 for INR3580m. These asset sales will help the group to bring down debt significantly and an investor could see the improvement in its financials by this fiscal end, said a Mumbai analyst.

Post the cement sale, Jaypee will have 10.6Mta of cement capacity in Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka, a hotel division with five luxury hotels, real estate division with land around Yamuna Expressway.

"We have time and again shown our will to take proactive steps to tide over these turbulent times caused by the economic slowdown," Jaypee Chairman Manoj Gaur said on 1 April 2016.