MUMBAI: Days ahead of its Annual General Meeting (AGM), IL&FS on Thursday decided not to pay dividends to its shareholders.
In a separate development, the RBI has put on hold its proposed meeting with the crisis-hit company. Sources said the central bank would prefer to take stock of the situation based on the outcome of IL&FS’ AGM scheduled on Saturday.
This weekend will likely seal IL&FS’ fate, based on the fiscal support coming from its key shareholders including LIC and SBI. The company needs an urgent whip-round of Rs 3,000 crore, besides approvals to raise an additional Rs 4,500 crore.
Last month, the company had reduced its proposed dividend payout from Rs 6 to Rs 1 per share. But now, even this stands scrapped as its debenture trustee, Centbank Financial Services, refused to let it pass. And not without a reason. Besides depleting cash (both reserves and receivables) in FY18, the holding entity IL&FS suffered a net loss of over Rs 1,868 crore, against a profit of Rs 142 crore a year ago.
Subsequently, the group entities started defaulting debt payments since June, when it couldn’t honour payments towards a Rs 100 crore commercial paper, forcing ratings agencies to downgrade it.
The group’s consolidated debt ballooned to Rs 91,000 crore in FY18, from Rs 80,000 crore in FY17. As a pre-emptive measure, the company early this week moved the NCLT, hoping to sit down with its creditors to restructure debt at mutually agreeable terms. The NCLT, which cannot process such requests from financial service providers unless the government calls for an exception, is yet to admit its plea.