IL&FS Needs Rs 100 Crore Every Month To Stay Afloat, Says Official
Infrastructure Leasing & Financial Services Ltd. needs about Rs 100 crore a month to keep functioning, a senior government official told reporters. This excludes the other contractual and repayment obligations of the cash strapped company, the official said.
The infrastructure conglomerate that has turned insolvent had a high leverage ratio of 13 times as the borrowing of about Rs 91,000 crore was on the base of equity and reserves of just Rs 6,950 crore.
As the priority is to remain afloat, measures like cost rationalisation will also have to be taken, the official cited earlier said.
The company needs a ‘temporary reprieve’ from its repayment obligations, the official said, adding that the board will honour its contractual commitments in critical projects, including those of the National Highway Authority of India. The newly constituted board of the company headed by Uday Kotak has also reached out to NHAI for settlement of pending claims and disputes, the official said. He added that settlement of NHAI’s dues may provide a “template” for settlement of other dues owed by state-owned entities to IL&FS.
Kotak met Ministry of Corporate Affairs Secretary Injeti Srinivas today to apprise him of the current situation of the company before its new board meets for the second time this week.
Due Diligence By Independent Agency
The new board of IL&FS is looking to hire independent specialised professionals to conduct due diligence of the infrastructure conglomerate and its associate companies, the official said.
The agency would do fact finding so that a clear picture emerges of the issues the company is facing, the official said.
The probe by government’s investigation arm, the Serious Fraud Investigation Office, is also ongoing and it’s expected to submit a report in a month. The government, while replacing the board of the company, had alleged misrepresentation of facts by the infrastructure behemoth, citing payment of dividends and huge managerial pay-outs despite liquidity crisis.