In a move to expedite the flow of funds into the cash-strapped company, IL&FS Transportation Networks (ITNL), the roads development arm of IL&FS, on Saturday re-designated its chief financial officer Dilip Bhatia, as chief strategy officer, responsible for divestment of assets and other strategic initiatives.
In a notice to the Bombay Stock Exchange (BSE) on Saturday, ITNL said the move is being made in view of “the strategic priority of monetisation of the company’s project assets and generating liquidity”. Bhatia will relinquish his responsibilities as CFO with immediate effect. ITNL said it would look for a new CFO in due course.
The rejig in Bhatia’s role comes a day following en masse resignations at another of the company’s subsidiaries, IL&FS Financial Services (IFIN), where long-serving MD & CEO Ramesh Bawa, along with four independent directors and a non-executive director, quit their positions from the struggling Mumbai-based conglomerate. On the day, IFIN said it defaulted on interest payments of Rs 250 crore to lenders.
Also on Friday, the Delhi High Court barred the roads arm, ITNL, from selling its assets till December 7, 2018, based on an arbitration application filed by Aditya Birla Finance Limited (ABFL), one of ITNL’s creditors for two of their road projects. ITNL said it is seeking legal advice.
As per the Delhi HC website, the cases pertain to ITNL’s Chenani Nashri Tunnelway (CNTL) and Pune Sholapur Road Development Company (PSDC).
According to IL&FS’ annual report, CNTL had a total outstanding loan of Rs 425 crore, as on March 31, 2018 while PSDC owed a total of Rs 250 crore. The loans to both these special purpose vehicles (SPV) were made by their parent firm, ITNL.
IL&FS, which had been hoping to raise funds to tide over a liquidity crisis and stave off further defaults on commercial papers, will now have to seek the court’s permission to raise funds via any asset sales. The company’s shareholders, notably Life Insurance Corporation of India and State Bank of India (SBI), had asked the company to come up with a turnaround plan, including the asset sale programme before extending it further support.
The HC order is limited to ITNL and does not stop the company from disposing assets in its other subsidiaries. However, of the 25 assets that IL&FS had identified for disposal, a chunk of it is under its roads development subsidiary.