IL&FS Hopes To Resolve Over 60% Of Total Dues
IL&FS Building at BKC, Mumbai. (Photo: IL&FS Annual Report)

IL&FS Hopes To Resolve Over 60% Of Total Dues

The new board of Infrastructure Leasing and Financial Services Group, which started defaulting on debt in August 2018, hopes to resolve about 60% of the entity’s outstanding dues.

So far, the group has resolved 186 of the 347 entities within the group, according to the billionaire banker Uday Kotak-led board of the conglomerate. Debt worth Rs 43,100 crore has been resolved so far, short of the Rs 50,500-crore resolution target the board had set for itself in July last year.

The management expects to bring the number of unresolved entities to below 100 by September, which would take the amount of debt resolved to Rs 51,000 crore, its senior management said in a virtual press conference on Thursday.

Calling it a "layered problem", the group's chairman Uday Kotak said the new board was appointed by the government when the large infrastructure financier was "fast degenerating into chaos". In October 2018, the government took over the group and replaced all its board members, giving the command to the new board led by Kotak. In March last year, the group got an approval from the National Company Law Appellate Tribunal on its debt resolution/distribution framework.

In October 2019, when it had resolved a little over Rs 30,000 crore worth of debt, the new management said it planned to resolve half of its total debt by 2020. The onset of the Covid-19 crisis slowed the process.

Details Of Debt Resolution So Far

According to details shared by the management:

  • Of the Rs 43,100 crore debt addressed till April 10, Rs 14,350 crore in debt resolution is awaiting a go-ahead from the National Company Law Tribunal and its appellate tribunal.

  • Another Rs 1,926 crore will come in by May by way of claim settlement from the Haryana government as per the apex court's direction in the Gurgaon Metro Project case, which was decided in IL&FS' favour in March.

The remaining debt worth Rs 26,800 crore, including debt recovery basis cash worth Rs 5,150 crore, includes:

  • Sale of 49% stake in Chongqing Yuhe Expressway and the waste management arm IL&FS Environmental Infrastructure & Services, that were together worth Rs 2,700 crore.

  • Settlements/claims received in three road projects — Kiratpur Nerchowk Expressway, Fagne Songadh Expressway, Chenani Nashri Tunnel — worth Rs 1,400 crore

  • Operating cash-inflow from annuity/toll income in roads and sale of power worth Rs 850 crore.

  • Insolvency proceeds from Dighi port and sale of commercial space in Maker Chamber VI at Nariman Point, Mumbai and in the Constantia building in Kolkata, worth Rs 150 crore.

The group plans to recover debt worth Rs 7,950 crore by September 2021, which would include:

  • Stake sale in ONGC Tripura, Warora Chandrapur, Karyavattom stadium, worth Rs 3,750 crore.

  • Completion of second phase of the proposed Infrastructure Investment Trust that will hold five road projects, worth Rs 2,920 crore.

  • Claims from concession authorities for two road projects — Khed Sinnar Expressway and Srinagar Sonmarg Tunnel — worth Rs 1,280 crore.

Beyond September 2021, the group plans to recover an additional Rs 9,950 crore worth debt, taking the total resolution to over 60% of the group's dues this calendar year.

The new board, according to CS Rajan, managing director of IL&FS, took one and a half years till March 2020 to arrive at the distribution and debt resolution formula, after which the pandemic struck the country.

The pandemic, he said, delayed the timeline of resolution plans as various lenders and the IL&FS debt resolution team were affected by Covid-19. The closure of courts and disruption in their functioning also delayed the resolution plans, he said. Further, delay in collecting dues from state governments and pending litigation in various entities also derailed its resolution plans.

However, "after having overcome all the challenges, we are very much there", he said. "We will leave no stone unturned in achieving the resolution worth Rs 61,000 crore that the board has set for itself by the end of this calendar year."

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