IL&FS: Fresh capital infusion by shareholders or new investors sought

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IL&FS seeks capital infusion, asset sale

IL&FS submits revival plan to NCLT, proposes capital infusion, assets’ sale

The new management of troubled Infrastructure Leasing & Financial Services on Wednesday presented to the National Company Law Tribunal a resolution plan, which includes “significant” capital infusion by shareholders or new investors, divestment of assets, liquidation of a few group companies, and debt restructuring at both group level and business vertical level. The infrastructure financier has taken austerity measures, including a salary cut of 10 per cent for those earning Rs 5 million and more and removing 69 consultants, the resolution plan said, apart from giving instances of fund diversion from the firm.

“We have brought a road map before (the Mumbai bench) that we intend to follow and, from now, it will be the execution of this road map. We have given detailed steps that we intend to follow, the steps already taken and the instances that have come to the notice of the board of directors, as well as on the challenges and threats that were looming when the new board took over,” Sanjay Shorey, director of legal prosecution at the corporate affairs ministry, told the tribunal.

In the plan submitted to the stock exchanges, IL&FS said the main problem of the group was its excessive leverage, without commensurate asset values or cash flows, from the perspective of both timing and quantum. “Thus, the new board believes that the final resolution will inevitably involve substantial deleveraging from the current levels, notwithstanding the various challenges. Such deleveraging will necessarily need to be achieved in an orderly manner, considering the scale and complexity of the IL&FS group, in the absence of which there could be dire impact on asset/company values, especially at the level of certain key verticals,” said IL&FS in its Report on Progress and Way Forward filed with the NCLT.

The new board headed by Kotak Mahindra Bank Chairman Uday Kotak expects to complete the process in the next six to nine months after following the due process in finalisation and implementation of the resolution plan, subject to market and economic conditions. The outstanding dues of the IL&FS group were Rs 942 billion, Shorey informed the tribunal. Besides parent IL&FS, the group has 346 entities, which include subsidiaries, associates, joint ventures, and jointly controlled operations.

 

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