NEW DELHI: After Infrastructure Leasing and Financial Services Limited (IL&FS) defaulted on payment of loans and especially, post the resignation of its Financial Services managing director Ramesh Bawa, the confidence of the top brass of the company, who are looking for an exit route, seems to be shattered.
“The company was unable to service its obligation in respect of LC (letter of credit) payment to IDBI Bank due yesterday (Thursday), which was non-banking day and hence payable today i.e. on September 21, 2018,” said the company in a regulatory filing on Friday night, which was followed by the sudden exit of Bawa.
Saddled with a debt of Rs 91,000 crore, the company has defaulted on several payments, the latest one being the LoC payment for the IDBI Bank. IL&FS’ consolidated debt doubled to Rs 91,091.3 crore in 2018 from Rs 48,671.3 crore in 2014, but its operating profit increased only at half the pace — to Rs 7,267.3 crore from Rs 5,087.4 crore in 2018 and 2014 respectively. But the firm hit headlines in September when it first defaulted on the payment of interest.
“The downgrading by ratings agencies, fear of probe by investigative agencies and several arbitration applications against the company have created fear among the Board members. So, everyone is looking for a safe exit route. At least five top management officials, including two COOs, have applied for long leave and in the coming week, there will be more exodus,” a Board member told The Sunday Standard on condition of anonymity.
It’s interesting to note that while the company’s debt mounted and order books shrunk, the remuneration of its directors has shot up. The remuneration of Ravi Parthasarathy was up by 144 per cent in FY18. Similar was the case of others in the top brass.
In fact, the exit started last year itself. It surprised many when Harish Engineer, former executive director, HDFC Bank, stepped down as a director on September 14, 2017, without an explanation. Many insiders already sensed trouble when in July, Ravi Parthasarathy stepped down on health grounds. On September 15, Sunil Behari Mathur was appointed as the company’s non-executive chairman with immediate effect in place of Hemant Bhargava, who was handling the affairs since the exit of Parthasarathy.
Earlier, on September 20, five of IL&FS’ directors, including four independent directors — Renu Challu, Shubhalakshmi Panse, Surinder Singh Kohli and Uday Ved — and one non-executive director, Vibhav Kapoor, had resigned.