IL&FS has told a bankruptcy court that it aims to resolve the liquidity crisis within about nine months, seeking to improve its debt-laden capital structure through asset sales, restructuring of outstanding loans, and infusion of funds.
“Buyer(s)/ investor(s) interest for the vertical level resolution is expected to be more likely, given that focused participants exist for different asset classes in India,” the new board of IL&FS told the National Company Law Tribunal (NCLT) in a detailed report on the debt-resolution choices currently under consideration.
“The New Board will follow due process in finalisation and implementation of the Resolution Plan(s) and expects to complete the process, in stages and parts, in next 6-9 months (subject to market and economic conditions),” it said.
The report went on to add that the “new board has noted that there appears to be valuable assets in the IL&FS Group which have generated sufficient interest in the market.”
The new board’s current assessment is that the resolution options could broadly involve significant capital infusion, disinvestments, and debt restructurings at the IL&FS group level, business vertical/platform level, or at an asset level, the company said in a separate press note.
“We have created the roadmap in compliance with the earlier NCLT order,” said Sanjay Shoriey, senior counsel from the ministry of corporate affairs, who was representing the government in the court.
All payments of Rs 1 crore or more will have to be approved by the managing director, while employees earning more than Rs 50 lakh a year will have to take a 10% cut in salary, the new board has proposed to implement.
The group employed 69 superannuated executives as consultants. They are likely to be removed now. The audit committee of IL&FS is also considering a special audit of actions by the previous board.
The board has also found that one loan in excess of Rs 1,500 crore was passed through eight group companies in what Shorey called a “circuitous transaction”.
IFIN, a subsidiary, is alleged to have availed loans in excess of the permissible regulatory norms. The group has debts of Rs 94,215 crore. Repayments have fallen overdue for about 5 percent of the outstanding amount.
The NCLT ordered the board to include representatives from all subsidiaries as respondents to the case next two fortnights. The court will next hear the case on December 03.
