NEW DELHI: Debt-laden Infrastructure Leasing & Financial Services (IL&FS) group may have to wind down some of its loss-making and defunct subsidiaries and sell some of its assets, to pay for its debt and streamline its business. The newly appointed Board is drawing up a list of such subsidiaries, sources in the Ministry of Corporate Affairs said.
IL&FS group’s outstanding debt as on March 31, 2018, stood at `91,000 crore. The company’s Board on Monday appointed Arpwood Capital and JM Financial Consultants as financial and transaction advisors (FTA) and Alvarez & Marsal as Restructuring advisors (RA) to assist in resolution process for the company. “The Board is of the view that the current business model is too complex. There are many subsidiaries that are inactive for many months. So, that can be wound off.
Also, the company will stick to its core business and will shelve off arms that are not doing too well. Once the company decides on what needs to be the core business arm of the company, the future roadmap for other subsidiaries can be prepared,” a senior official from MCA told TNIE. While the FTA would assist in valuing and monetising assets of the group as part of the resolution plan for the company, the RA is to assist in the day-to-day management of affairs including liquidity.
“The two identified FTAs shall act as financial and transaction advisors as well as undertake valuations across divestments and monetisation,” it said.Alvarez & Marsal would help in “maintaining strict controls on and managing liquidity on a day-to-day basis at all levels in the group”, according to the company. Uday Kotak has roped in his trusted aide and former investment banking head TV Raghunath, who will work along with Alvarez & Marsal to develop the debt-restructuring plan.
The government had given a deadline of 15 days for the newly appointed Board of IL&FS to submit the future roadmap for the company. The Board is also mandated to present its roadmap before the National Company Law Tribunal by October 31, when the next hearing is scheduled.
Some of the ongoing road construction projects may be the first to be on the block as there is pressure from the Ministry of Road Transport. Projects have been stuck because of the crisis and they demand more capital. IL&FS’ financial services and energy arms could be the next to be put on the block, sources said. They would be either sold partially or shelved off completely.
The new Board’s progress so far has been to the satisfaction of the ministry. “We are keeping a close watch over the functioning and the new Board is doing its work diligently. The crisis built over years cannot be solved overnight, but we are hopeful that the Board will be able to turn around and restore the company to its original glory,” the official said.