The new board of Infrastructure Leasing & Financial Services (IL&FS) has reached out to the National Highways Authority of India for settlement of claims, as payment of dues from NHAI would provide immediate relief to the infra major currently defaulting on its debt obligations, a senior government official said on Wednesday. Settlement of payments by the NHAI can provide a “template for other state-owned companies” to clear their dues to the IL&FS group, he said. The new board is also looking to appoint more directors and professionals at various subsidiaries of the IL&FS. A director with the former board of the IL&FS group had told The Indian Express that of the IL&FS group’s total receivables, it has payment dues of around Rs 15,000-16,000 crore from the NHAI.
Government officials commented on the developments Wednesday after Uday Kotak, who was appointed as non-executive chairman of IL&FS, and Vineet Nayyar, chosen as managing director and vice-chairman of the infra company, met Corporate Affairs Secretary Injeti Srinivas to discuss developments about the company. “We are consulting government and making progress. We will get back to you at an appropriate time,” Kotak said after the meeting.
“More efforts are required to get a clear picture of the issues at IL&FS, in order to devise any resolution plan. The new board is also planning to appoint independent specialized professionals to do due diligence of its group companies,” sources in the ministry said. In order to provide legal protection to the new board to take decisions in larger public interest in the case of IL&FS, the Ministry of Corporate Affairs has obtained permission of the National Company Law Tribunal to ring-fence the board against legal action by its lenders, creditors and investors.
The ministry said in its application to NCLT’s Mumbai bench last week that any legal or punitive action by the creditors, lenders or investors of IL&FS group against the new board should go through the tribunal. It also said that any action against default of loan by the group should be directed through the NCLT. The Tribunal has accepted the government’s demand. “The IL&FS board has obtained relief and legal immunity from NCLT Tuesday. They have also been allowed to induct new directors in subsidiaries and joint venture companies of the IL&FS group. This should enable the board to pursue a resolution plan at the company,” the sources said.
The IL&FS group, which has a total debt of Rs 91,000 crore, has to repay Rs 1,085 crore worth of commercial papers in the next six months during October 29, 2018 to March 13, 2019. Last week, the government had moved the NCLT to supersede the board of IL&FS, which had defaulted on payments of over Rs 3,000 crore over a two-month period. After the first meeting of the new board last Thursday, Kotak had said: “We’re evaluating options to ensure that the fair value of the asset and the enterprise is preserved to the maximum extent that we can do and find a fair resolution mechanism.”
The new board members are: Uday Kotak, vice chairman and MD of Kotak Mahindra Bank, retired IAS officer Vineet Nayyar, former Sebi and LIC chairman GN Bajpai, former IAS officer and ICICI’s non-executive chairperson G C Chaturvedi, Director General of Shipping and Maharashtra cadre IAS officer Malini Shankar and former Deputy Comptroller and Auditor General Nand Kishore. On October 3, former Rajasthan State Secretary CS Rajan also joined in.
Sources said the government is not ruling out the possibility of fraud by previous management of IL&FS and the Serious Fraud Investigation Office is already investigating the entire group.