Road construction takes place near the IL&FS building, in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

IL&FS Financial Services Defaults On Loans Worth Rs 440 Crore

IL&FS Financial Services Ltd. has failed to service debt worth Rs 440.46 crore, including five bank loans between Sept. 12-26, as things continue to sour for the debt-laced firm.

The subsidiary of the crisis-hit Infrastructure Lending & Financial Services Group failed to service short-term deposits amounting to Rs 52.43 crore due today, according to its stock exchange filing. The non-banking lender also defaulted on a Rs 103.53 crore term deposit that was due Sept. 25, and five bank loans worth Rs 284.5 crore including interest.

The default comes just a week after the firm’s chief executive officer and managing director Ramesh Bawa stepped down. The same day, it also defaulted on its credit obligation to IDBI Bank.

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.

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 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.