IL&FS Financial Services Chief Ramesh Bawa Resigns Amid Financial Troubles
IL&FS Financial Services Ltd. Chief Executive Officer and Managing Director Ramesh Bawa resigned at a time when the group is facing a severe liquidity crunch and downgrades.
Bawa tendered his resignation with effect from Sept. 21, 2018, according to a stock exchange filing. IL&FS Financial Services is the non-banking lending subsidiary of the Infrastructure Lending & Financial Services Group.
IL&FS Financial Services also failed to service its credit obligation to IDBI Bank which was payable today, it said in a separate filing.
Earlier, ICRA had junked IL&FS Financial Services’ commercial papers worth Rs 4,000 crore to default. It has a standalone debt of Rs 17,000 crore.
The non-banking arm’s CEO’s exit comes at a time when defaults by IL&FS group entities have rocked India’s credit markets. Both ICRA and Care Ratings have cut the ratings of the group’s debt instruments to as low as they can go. ICRA also cut its short-term and long-term borrowing programmes worth over Rs 12,000 crore to junk status.
“The liquidity profile of the group has been under pressure given the delays in fund raising as initially envisaged, deterioration in credit profile of key investee companies and the sizable repayment obligations at group level in the near term,” ICRA had earlier said in an emailed statement.
IL&FS defaulted on a Rs 1,000 crore loan from the Small Industries Development Bank of India earlier this month. Again, on Sept. 14, it defaulted on a Rs 105-crore commercial paper redemption and defaulted on another Rs 80-crore worth of inter-corporate deposits the following day.
IL&FS Group reported losses before tax of Rs 2,110 crore ($292 million) in the year to March 31, the first such loss since at least 2015, according to its annual reports.
The group had planned a Rs 4,500 crore rights issue and Rs 3,500-crore long-term credit from its shareholders including Life Insurance Corporation and State Bank of India Ltd. But these plans are yet to be finalised. An emergency board meeting on Saturday failed to secure immediate liquidity support.