Mumbai: Two years after taking control of bankrupt Infrastructure Leasing and Financial Services (IL&FS), the Uday Kotak-led board of directors has resolved ₹19,100 crore, or roughly 19%, of the group’s outstanding debt of over ₹1 trillion.
During the July-September 2020 quarter, the new management resolved debt of approximately ₹1,460 crore—by way of sale of the education business, recovery from non-IL&FS group entities, increase in cash balances and debt repayment in green (solvent) entities. However, the target for debt resolution during Q2 had been ₹8,800 crore, which the group missed by a wide margin of ₹7,300 crore.
However, in a press release on Saturday, the new management of IL&FS maintained its target of addressing ₹50,000 crore of the group’s bad debt by March 2021.
The group said the delay “has been mainly caused on account of significant impact of covid-19, which has added time and logistical complexities in the process of completing discussions with stakeholders and in obtaining approvals from lenders, regulators and judicial authorities.” The inability to conduct face-to-face discussions, site-visits, due-diligence, smooth negotiations with key stakeholders—lenders, bidders (domestic and offshore) on complex transaction structures, delays in receipt of annuities from certain state governments and pending court filings and transaction closure conditions have slowed down the resolution process.
As per revised estimates, ₹13,200 crore of additional debt is projected to be addressed by December 2020, the group said. This includes ₹8,150 crore resolved through the proposed InvIT (infrastructure investment trust) for which an “in-principle” approval from Sebi has been received. Further, resolution of ₹4,200 crore being achieved through debt restructuring has moved from September 2020 to December 2020. “The resolution for ₹10,000 crore, earlier communicated for achievement in Q3 FY21, is being moved to be achieved in subsequent periods,” the group said.
Other developments during the second quarter included launching the sale process for IL&FS Engineering & Construction and for the IL&FS Financial Center building in Mumbai as well as looking for buyers for the external loan book of IL&FS Financial Services.
