While the newly appointed board of crisis-hit Infrastructure Leasing and Financial Services (IL&FS) is slated to hold its second meeting on Friday, the government has expedited its own evaluation of the depth of the trouble the infrastructure-financing and engineering conglomerate has got into and steps to salvage it with whatever legitimate support.
According to sources, the ministry of corporate affairs (MCA) has commenced a “probe into 179 subsidiaries” of the debt-laden group, to ascertain if these firms, the existence of which wasn’t common knowledge until the board stumbled upon them in its first meeting, indeed have any operational role or are mere shell companies.
A detailed report on the existence and status of the 348 companies in the IL&FS fold (169 known earlier and the 179 newly found) is likely to be ready before the next hearing of the case at the National Company Law Tribunal on October 31, an MCA official told FE.
Separately, a senior official at the ministry of road transport and highways told FE that the National Highways Authority of India (NHAI) will soon get the valuation of the seven stuck road projects of the beleaguered firm done by a third party. This could facilitate and quicken the IL&FS plan to monetise them. “Our intention is to see the IL&FS highway projects are executed. They (the board) have their options to complete the projects on their own. Money can come from sale of (18) completed projects as well, though we are yet to receive any communication (from the board),” said the ministry official.
IL&FS have seven incomplete highway projects with combined length of 2,950 km. These include the Barwa Adda Expressway (727 km), Fagne Songadh Expressway (698 km) and Kiratpur Ner Chowk Expressway (327 km).
According to the sources, if approached, the NHAI might deem it fit to do the valuation of these projects by a third party in order to arrive at a mutually-agreed price. “After getting these projects at a mutually-agreed price, the NHAI will auction them off to developers,” said the MoRTH official.
All the road projects of the defaulting infrastructure firm IL&FS are with a subsidiary – IL&FS Transportation Networks (ITNL).
In all, it has 13,493 km domestic road projects – 14 BOT (toll) and 11 are BOT (annuity).
On October 1, the government superseded the board of IL&FS and appointed a six-member board with Uday Kotak as the non-executive chairman. With an extra 179 more companies coming to the knowledge of the board, the group’s debt could be much higher than the earlier reported ?91,000 crore as at March-end 2018.
Singapore-based REDD Intelligence said in a report that IL&FS might require impairments of around ?15,000 crore in loans and equity in its subsidiaries. “Given the second-lien nature of the secured loans at IL&FS parent and ITNL parent, recovery could be constrained by the quality of the collateral,” it said.
Kotak will meet corporate affairs secretary Injeti Srinivas on Wednesday.
As FE reported recently, there is a huge difference between the amounts IL&FS claimed in its recent AGM and an earlier conference call with analysts as the possible receipts from the stuck road projects – at the AGM on September 4 it said it had filed claims for Rs 16,000 crore with the government but it had told analysts two weeks earlier that the it had filed claims for about Rs 9,000 crore, of which it expected to receive Rs 3,500-4,500 crore.
Road transport and highways minister Nitin Gadkari recently told FE, “We will try to help IL&FS projects… we will try to save them.”
(With inputs from Rouhan Sharma in Mumbai)