The government may have to bail out cash-strapped Infrastructure Leasing and Financial Services (IL&FS), following failed attempts by the company to raise Rs 4,500 crore through a rights issue.
According to Mint, the IL&FS board, chaired by Kotak Mahindra Bank Ltd’s managing director, Uday Kotak, is likely to pitch the Centre for a government bailout. People familiar with the development told the newspaper that the bailout could be a variant of the US government’s rescue act following the 2008 financial crisis.
On 12 October, the newly constituted board of IL&FS, headed by veteran banker Kotak, met for the second time to decide on further course of action plan for the cash-crunched company.
In the maiden meeting held on 4 October, the six-member board undertook an initial assessment of the ground reality of the company and discussed the way forward.
The firm needs an immediate capital infusion of Rs 3,000 crore. Speaking to reporters after the first board meeting, Kotak had hinted that the crisis at the infra lending and engineering conglomerate was much more complex than earlier thought as the number of its subsidiaries and associates have more than doubled to 348.
"We undertook an initial assessment of the ground reality and the way forward. We'll meet frequently to implement the directions of NCLT and to prepare a roadmap and turnaround," Kotak had said.
As per the NCLT order, the board is required to give a roadmap for the company by 31 October. Kotak had said the resolution will take some time and the board's focus is to preserve the fair value of the assets and the enterprise to the maximum extent. On 1 October, the government superseded the board of IL&FS and appointed a six-member board with Kotak as the executive chairman.
The other members of the board include former SEBI chairman GN Bajpai, ICICI Bank non-executive chairman GC Chaturvedi, IAS officer and the director general of shipping Malini Shankar and Vineet Nayyar and veteran auditor Nandkishore.
The company as of March 2018 owed over Rs 91,000 crore to banks and other creditors.
--With inputs from PTI
Updated Date: Oct 22, 2018 14:23 PM