What do you guys think about Jaypee Greens Wishtown - NOIDA? Is this a good time to buy? Is Wishtown a good investment?

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  • Originally Posted by pkgandhi
    By double-financing I mean banks ( not necessarily the same ones) have financed both the land and retail loans on the flats to be built on it. In any case the net result is that the land is no longer unencumbered and there are multiple claims on it.

    I know what double financing is. The first bank (of the builder) will get the first charge. There is no question about that. But over what? You fail to realize that the debt against Kalypso court's land is not all the debt of Jaypee at Holding level or even at Subsidiary level it is at asset level. Debt issued against the land of Kalypso Court will be a portion of the asset value (land only).

    Say kalypso courts land value is X and the debt issue against it was 0.8X. When the building was constructed the value of Kalypso court as an asset increased to 2X. This was funded by buyers who are also creditors (say second charge). The bank should have no problem giving NOC as long as retained value in the asset does not fall below X. Alternatively the bank will give NOC for every $1 of asset transfer for $0.4 principle repayment on that particular asset.

    Reputable international auditors ? Lol, sir. Firstly JP uses a small time accounting firm, which probably gets 90% of its revenues from JP. Look at the quality of their financial reporting. There is 40k crores of opaque contingent liabilities hidden away in JPA subsidiaries. In any case we have seen track record of reputable international firms in the cases of enron and satyam.

    Enron? That's from pre reform era. But again I have no experience on India. Auditors are independent you cannot ask your own accounting firm to audit their own work. As long as the people auditing their books are from the big 4 I am happy. If not that is concerning. I have never looked at their books.


    Above
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  • Originally Posted by jollygood
    Most builders do pledge their land for working capital loan, when you buy a house the builder sells you a unit but when you take a home loan the bank insists on a unecumberance certificate from the builder. The builder then needs to get clearance from his banker either by paying something upfront or receivables from the buyer needs to be deposited with the bank.
    In normal course this would work if the loan is paid off by the time the house are ready for registry.


    Wow you put things so much better than me. I can't educate to save my life. Thank you for your explanation. Very layman friendly.
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  • Originally Posted by Imperialnoid
    Above

    Sir the point is that all lending involves making an assessment of marketable value, which may be too aggressive. Dual financing compounds this problem, but in any case it complicates bankruptcy resolution, since there are banks holding specific and general charges on the land as well as buyers who have registered or paid for flats.

    JP is not audited by any top 4 firm as far as I know. If your information is different, please share.
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  • I am not a Finance Guy and i have almost nil knowledge on reading Balance sheets .

    I see many Posts being made here ( & in many other threads ) which r beyond a common man .

    Please post in a language which is understood by most . If your r quoting text, please try to explain the relevance/meaning .

    I am not looking to turn this thread/Forum into an Accounts/Financial Forum .
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  • Sorry Mod. There are no quotes. This is all quite basic. But then I can appreciate it might be beyond the scope of some people. I spent a lot of time structuring those paragraphs. I hope you can leave them on for people who can understand this as there is a lot of fear mongering going on.
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  • Originally Posted by jollygood
    Most builders do pledge their land for working capital loan, when you buy a house the builder sells you a unit but when you take a home loan the bank insists on a unecumberance certificate from the builder. The builder then needs to get clearance from his banker either by paying something upfront or receivables from the buyer needs to be deposited with the bank.
    In normal course this would work if the loan is paid off by the time the house are ready for registry.

    Thanks for that . to extend the explanation in layman terms, all payments that JP recieves from customers have to first paid to the banks who hold lien on the pledged land, before any money becomes available for continuing construction/finishing Wishtown.
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  • Originally Posted by pkgandhi
    Thanks for that . to extend the explanation in layman terms, all payments that JP recieves from customers have to first paid to the banks who hold lien on the pledged land, before any money becomes available for continuing construction/finishing Wishtown.


    No dues must be settled prior to possession. So there is no claim after possession.

    Okay enough for today, do some reading. I don't want to get banned.
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  • Originally Posted by Imperialnoid
    No dues must be settled prior to possession. So there is no claim after possession.

    If there was just one customer it would be simple. Will JP settle all dues on Kalypso before a single possession is offered ?
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  • Originally Posted by pkgandhi
    If there was just one customer it would be simple. Will JP settle all dues on Kalypso before a single possession is offered ?


    I have already answered this read below.

    I know what double financing is. The first bank (of the builder) will get the first charge. There is no question about that. But over what? You fail to realize that the debt against Kalypso court's land is not all the debt of Jaypee at Holding level or even at Subsidiary level it is at asset level. Debt issued against the land of Kalypso Court will be a portion of the asset value (land only).

    Say kalypso courts land value is X and the debt issue against it was 0.8X. When the building was constructed the value of Kalypso court as an asset increased to 2X. This was funded by buyers who are also creditors (say second charge). The bank should have no problem giving NOC as long as retained value in the asset does not fall below X. Alternatively the bank will give NOC for every $1 of asset transfer for $0.4 principle repayment on that particular asset.
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  • When a bought a flat, I was issued the allotment letter after I paid the booking amount. But when I took a home loan, my bank wanted a developer NOC, basically a consent from the builders bankers to release mortgage on my specific flat.

    As I understand loan on land is like a pledge on specific flats so it is possible that 50% flats may be encumbered and others free for builder to sell.

    Similarly for registry the bank may have to release mortgage on specific flat.
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  • Originally Posted by Imperialnoid
    Sorry Mod. There are no quotes. This is all quite basic. But then I can appreciate it might be beyond the scope of some people. I spent a lot of time structuring those paragraphs. I hope you can leave them on for people who can understand this as there is a lot of fear mongering going on.


    This was not meant for u exclusively .

    I have been reading your posts . U look good . Keep on posting .
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  • Originally Posted by Imperialnoid
    I have already answered this read below.

    I know what double financing is. The first bank (of the builder) will get the first charge. There is no question about that. But over what? You fail to realize that the debt against Kalypso court's land is not all the debt of Jaypee at Holding level or even at Subsidiary level it is at asset level. Debt issued against the land of Kalypso Court will be a portion of the asset value (land only).

    Say kalypso courts land value is X and the debt issue against it was 0.8X. When the building was constructed the value of Kalypso court as an asset increased to 2X. This was funded by buyers who are also creditors (say second charge). The bank should have no problem giving NOC as long as retained value in the asset does not fall below X. Alternatively the bank will give NOC for every $1 of asset transfer for $0.4 principle repayment on that particular asset.

    Boss I understand all of that . what you don't seem to understand is that firstly X is based on an assumption of where land can be sold. The real value might be 0.5x or even lower in a fire sale. Secondly, there are loans that JP has taken that are secured not by first charge on specific assets but a general charge on all assets of the firm. That will open another can of worms but I am done for now.
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  • Originally Posted by pkgandhi
    Boss I understand all of that . what you don't seem to understand is that firstly X is based on an assumption of where land can be sold. The real value might be 0.5x or even lower in a fire sale. Secondly, there are loans that JP has taken that are secured not by first charge on specific assets but a general charge on all assets of the firm. That will open another can of worms but I am done for now.


    Can u explain this a commons's man language ?

    I am not as learned as u .
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  • Originally Posted by pkgandhi
    Boss I understand all of that . what you don't seem to understand is that firstly X is based on an assumption of where land can be sold. The real value might be 0.5x or even lower in a fire sale. Secondly, there are loans that JP has taken that are secured not by first charge on specific assets but a general charge on all assets of the firm. That will open another can of worms but I am done for now.


    You are coming back to the points that have already been addressed.

    what you don't seem to understand is that firstly X is based on an assumption of where land can be sold. The real value might be 0.5x or even lower in a fire sale.

    X is the market value according to independent valuers approved by the banks at the time loan is issued. The loans are a decade old and 0.8X was very generous should be around 0.7X.

    Very unlikely. The reason banks loan at 0.8X is because they want to take into account crashes. I am very upset with the valuation of the asset sold by Jaypee. They are below X but certainly above 0.8X otherwise banks would wait for a better offer.

    Secondly, there are loans that JP has taken that are secured not by first charge on specific assets but a general charge on all assets of the firm. That will open another can of worms but I am done for now.

    Who said this? If something sells below 0.8X then it can spill over to other assets. There are no general loans. Jaypee is a lala organisation banks are not.
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  • AFAIK - In Wishtown only the very first projects Kalypso, Imperial and Pelican (plots) were mortgaged. And some commercial land. Nothing else was mortgaged.

    Other mortgages exist in Jaypee Greater Noida but most on YEW land/Sports City and on the first 40 kms of YEW eWay (Greater Noida to Jewar)

    In anycase there is no encumberance over most of WT - and where there is - registries are being permitted
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