IL&FS Has 348 Entities, More Complex Than Expected, Says Board

To all stakeholders, we will do what is in the right interests of the different categories of stakeholders. We’ll try and bring clarity. And the core message is we are here to rebuild trust and do it in an open, fair, objective manner. This, on behalf of all the board members, I would like to assure.

If you read the debt obligations, those were as of Mar. 31. Obviously this is a moving target, we are looking at all obligations and financing raised by the company which includes different kinds of debt—secured, unsecured, bonds, loans, commercial papers. There are also other instruments like preference capital which sits between debt and equity. There are off balance sheet liabilities as well. It is difficult to establish the complete liabilities of the company.

If the company had enough cash to pay its debts we would not be sitting here. Obviously we have a challenge. But after today’s meeting we have a sense of broadly what direction we need to go forward in.

We obviously understand that valuations may be different but we have a sense of the various alternatives that we can explore. But keep in mind for us to be able to assess a whole maze of 348 entities, more than double of what was the earlier assessment, it will take us a longer time.

We are evaluating options to ensure that the fair value of the asset and the enterprise is preserved to the maximum extent that we can do and find a fair resolution mechanism.

The board is committed to an objective process of making a fair assessment of the facts. We’ve heard the management’s views which we’ve absorbed. We have to ensure that we make an assessment that is objective, and after a fair process.

In case of Satyam it was a simple case of felony. The person stole the money, forged accounts. As bad as it was, I believe it was relatively simple. Here the complexity is greater. There is no evidence of felony, but putting it back on its feet will require efforts at multiple levels. Therefore you may not have such a clear cut solution.

We will be talking to shareholders at an appropriate time. The current focus today was much more about operating under NCLT process. At the same time taking more immediate steps which needed urgent attention of a board with an open mind.

The audit committee would evaluate the accounting systems, internal audit, interact with statutory audit. Then we’ll see if some strengthening is required. This is the initial stage and all options need to be weighed.

Legal challenges, in a situation like this, will be lots. The overall size of debt is significant and the structure is complex. And that is part of the challenge.

Everything is looked at with a fresh pair of eyes. All board members have at some level had an advantage of looking at it with an open mind. There’s no history we carry with us. We have laid out options. We are now working on systematically fleshing out these.

We’ve hardly been here for 24 hours. Like in any company, there are some outstanding people and some not so good people in this company. We have no pre-determined view on any people. Our objective will be to create an enabling environment. However, I will not underestimate the challenges at hand. 

We have taken a number of views and also what further action we need to take.