Uday Kotak, the newly elected non-executive chairman of troubled Infrastructure Leasing and Financial Services (IL&FS) on Thursday assured stakeholders and creditors that the new board was considering all options to put the debt-laden firm back on track.
The board also elected Vineet Nayyar as the vice chairman and managing director of IL&FS, and reconstituted four statutory committees — audit committee, nomination and remuneration committee, stakeholder relationship committee and corporate social responsibility committee.
“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.
Kotak said the board will meet frequently as the scale of issues confronting IL&FS is more complicated than was expected. “The most important thing is to rebuild trust. The markets do not like any uncertainty, whether it is good or bad, and we are committed to provide clarity in an open and transparent manner, particularly as this is a very significant financial markets intermediary. The number of subsidiaries and associates, at 348, is more than double what the media has been reporting over the past few days or what we were aware of,” Kotak said.
“If the company had enough cash to pay its debts we would not be sitting here. Obviously we have a challenge. But after today’s meeting we have a sense of broadly what direction we need to go forward in. We obviously understand that valuations may be different but we have a sense of the various alternatives that we can explore,” Kotak said.
“But keep in mind for us to be able to assess a whole maze of 348 entities, more than double of what was the earlier assessment, it will take us a longer time,” he 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.
Nayyar, also part of a board that was reconstituted a decade ago to save the erstwhile Satyam Computers, said the situation with IL&FS is not comparable. “Bad as it was, Satyam was a case of simple felony. We do not have reason to believe that this is the case here. However, given the sheer scale of IL&FS, we do not underestimate the challenge we are faced with. This is a very complicated company.”
Earlier this week on Monday, 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 CAG Nand Kishore. On Wednesday, former Rajasthan State Secretary CS Rajan also joined the new IL&FS board.
Will contain IL&FS crisis quickly: Jaitley
New Delhi: Finance Minister Arun Jaitley Thursday said the government is determined to contain the crisis at the IL&FS at the earliest so that it does not leave any adverse impact. “There was significant impact on the markets in last few days on account of the contagion effect that took place on account of uncertainties over IL&FS. The government has taken a decisive step in that regard, replaced the board and of course under the new board now we would take various decisions and the government is determined to make sure that since this is an internal factor to India this should be contained quickly so that no adverse impact of it is left,” Jaitley said. The government earlier this week superseded the board of IL&FS, which has a debt burden of Rs 91,000 crore and has defaulted on series of loan repayments. —ENS