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Firm and Decisive Government Action taken to preserve value and assets of IL& FS

News and Press Release - Dated:- 1-10-2018 - Firm and Decisive Government Action taken to preserve value and assets of IL& FS Government stands fully committed to ensure much needed liquidity arranged for the IL& FS from the financial system so that no more defaults take place and the infrastructure projects implemented smoothly IL&FS, incorporated in 1987, is a large Systemically Important Non-Deposit Accepting Core Investment Company (CIC-ND-SI). It has numerous infrastructure asse .....

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massive effect in the financial markets causing redemption pressure on the mutual funds, which held such financial instruments and has also adversely impacted the sentiments on the stock markets, money markets and debt markets. The redemption pressure on mutual funds has created a large systemic risk leading to quality papers being sold at steep discounts to meet the redemption demand. The debt market shocks got transferred to the equity market sparking sell off particularly in NBFC stocks and .....

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unprecedented rating downgrade from highly rated to a default category. Considering the capital base of the Group, the leverage is very high. The IL&FS Group is involved in many infrastructure projects including through equity and debt financing. Any impairment in its ability to finance and support the infrastructure projects would be quite damaging to the overall infrastructure sector, financial markets and the economy, considering its systemically important nature. The Government stands f .....

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ad become stalled infrastructure projects even before 2014. This affected their financial performance and significantly increased the leveraging as delayed projects were kept afloat by more and more debt financing. IL&FS Engineering had a series of losses beginning 2011-12 and minimal profit started after 2015-16. IL&FS Transportation Network Ltd. witnessed significant erosion of profit starting from 2012-13 and the net debt also increased more than two times from ₹ 13939 crore to .....

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pital and financial markets. There is an emergent need to immediately stop further financial defaults and also take measures to resolve defaulted dues to the claimants. This would require a combination of measures of asset sales, restructuring of some liabilities and fresh infusion of funds by the investors and lenders. The confidence of the financial market in the credibility of the IL& FS management and the company needs to be restored. There appears to be significant liquidity gap in the .....

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y necessary for saving the Group from financial collapse, which required an immediate change in the existing Board and management and appointment of a new management. Continuance of the present Board had become prejudicial to the interests of the company and its members and this management was affecting public interest because of its adverse impact on financial stability and making capital markets so adversely affected. Therefore, the National Company Law Tribunal (NCLT) was approached today by .....

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f a report received from the Regional Director, Mumbai under the Ministry of Corporate, Affairs which clearly brought out serious corporate related deficiencies in the IL&FS holding company and its subsidiaries. It was noted that the consolidated financial statement of IL&FS holding company and its subsidiaries, associates and joint ventures projected a picture through highly exaggerated depiction of non-current assets in the form of intangible assets amounting to over ₹ 20,000 cro .....

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he debt-equity ratio because of excessive leveraging, which has put a question mark in its ability to continue as a going concern if allowed to continue in the hands of the present management. The high debt stress was clearly visible in the company and its main subsidiaries for the last so many years, but was camouflaged by misrepresentation of facts. Besides, the fact that the company continued to pay dividends and huge managerial pay-outs regardless of looming liquidity crisis shows that the m .....

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