Rs 91,000-crore debt: IL&FS board to submit revival plan to NCLT; sale of company also on the cards

According to bankers, the IL&FS had some solid infrastructure assets which can be monetised easily. There are incomplete and shelved projects which will remain a headache for the new managers. Banks are waiting for the IL&FS board to raise funds so that their exposure in the company doesn’t become non-performing assets.

“Because of the IL&FS default, there is pressure on mutual funds. The corporates who were providing liquid funds to mutual funds have become very cautious. In turn, the mutual funds have become cautious about their investments,” SBI Chairman Rajnish Kumar said. “We are trying to stabilise the system and tackle the situation. The RBI has announced measures around improving liquidity for NBFCs. The government, RBI and SBI… all of us are trying that the system stabilises very quickly,” he said.

Earlier this month, Uday Kotak, the newly elected non-executive Chairman of IL&FS had said the board was considering all options to put the debt-laden company back on track. “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,” Kotak said after the first meeting of the newly constituted board of directors of IL&FS. “To all stakeholders, we will do what is in the right interests of the different categories of stakeholders. We’ll try and bring clarity. And the core message is we are here to rebuild trust and do it in an open, fair and objective manner. This, on behalf of all the board members, I would like to assure,” he said.

IL&FS has 348 subsidiaries and associates. “We obviously understand that valuations may be different but we have a sense of the various alternatives that we can explore,” Kotak said. “The board is committed to an objective process of making a fair assessment of the facts. We’ve heard the management’s views which we’ve absorbed. We have to ensure that we make an assessment that is objective, and after a fair process,” he said.

On October 1, the government had moved the Mumbai bench of the National Company Law Tribunal to supersede the board of IL&FS, which had defaulted on payments of over Rs 3000 crore over a two-month time period. 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 G N 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 (CAG) Nand Kishore. Former Rajasthan State Secretary CS Rajan also joined the IL&FS board later.

The NCLT bench had directed the new board to submit a report to the bench on its findings and a road-map for the debt laden company before the next date of hearing. The new board is likely to review the operations and funding plan of the IL&FS group and work out a restructuring proposal in the coming days.