In a significant milestone, Infrastructure Leasing & Financial Services (IL&FS), a company that faced a severe financial crisis five years ago, has announced that it has successfully cleared approximately 36% of its debt, amounting to a substantial Rs 35,660 crore. Furthermore, the company has outlined plans to clear an additional Rs 25,000 crore in debt. This development reflects a remarkable turnaround for IL&FS since the government replaced its board in 2018 amidst a financial crisis that threatened the stability of the financial system.
“The group has also completed an aggregate payment of approximately Rs 10,000 crore by way of interim distribution across 14 companies, including two vertical holding companies (ITNL and IFIN) and the group holding company,” the group stated in an official announcement.
The government’s intervention came on October 1, 2018, when it superseded the existing IL&FS board, led by Ravi Parthasarthy, and appointed a new board consisting of seasoned professionals such as banker Uday Kotak, Tech Mahindra’s Vineet Nayyar, and retired civil servant G C Chaturvedi, among others. This move aimed to steer the group through turbulent waters and initiate a process of debt resolution and asset sales.
While the previous directors of the company did not face legal action, investigations and legal proceedings were initiated against some executives who held key positions in the holding company and its subsidiaries, including IFIN and ITNL. However, these cases are yet to reach a conclusion.
The newly appointed board began its arduous journey of untangling the complex web of IL&FS companies and selling assets to reduce the mounting debt. Over the years, they have made significant progress in this endeavor, as evidenced by the recent announcement of debt clearance.
The statement released by IL&FS further elaborated on the board’s efforts, mentioning the initiation of the first interim payout of Rs 810 crore for IL&FS, the group’s holding company. Of this amount, Rs 180 crore is allocated to 19 domestic and international banks, while approximately Rs 630 crore will be distributed among over 1,100 public debenture holders, public funds, and other stakeholders.
In addition to the payout to IL&FS, the group has initiated an interim payment of Rs 796 crore to eligible creditors of ITNL, with Rs 305 crore designated for secured and unsecured creditors, Rs 315 crore to approximately 1,300 public debenture holders, public funds, and others, and Rs 176 crore allocated to group creditors.
Moreover, the board has taken steps to execute the second tranche of the interim payout, amounting to Rs 807 crore, directed toward eligible lenders of IFIN. Out of this sum, Rs 574 crore will be disbursed to banks and financial institutions.
Over the past year, the group has successfully completed interim payouts to external creditors of 12 companies within its portfolio. These include significant sums such as Rs 623 crore for Rapid Metro Gurgaon, Rs 1,252 crore for Rapid Metrorail Gurgaon South, Rs 3,200 crore for IL&FS Financial Services, Rs 920 crore for Chenani Nashri Tunnelway, and Rs 253 crore for Inox Wind Energy.
IL&FS’s achievement in significantly reducing its debt and addressing its financial challenges reflects the resiliency and commitment of the new board and underscores the positive trajectory of the company’s revival. The successful debt clearance and interim payouts are pivotal steps toward securing IL&FS’s financial stability and instilling confidence in its stakeholders.
