IL&FS addresses Rs 55,000 crore debt, Uday Kotak’s tenure as Chairman ends in April

After the group became a defaulter and the government superseded its board in October 2018, Infrastructure Leasing & Financial Services Ltd (IL&FS) has addressed its debt resolution of Rs 55,000 crore, or nearly 55 per cent of the debt.

While Uday Kotak’s tenure as non-executive Chairman will end on April 2, the Ministry of Corporate Affairs has appointed CS Rajan Chairman and MD of IL&FS for six months with effect from April 3. The IL&FS group retained its overall resolution estimate at Rs 61,000 crore, representing 62 per cent of overall — fund-based and non-fund based — debt of over Rs 99,000 crore as of October 2018.

“IL&FS is a case study for how we should think about the future of structure, regulation and governance and how we built a resolution framework in areas that are non-man’s land,” Kotak said.

“The debt addressed till date (Rs 55,000 crore) represents over 90 per cent of the overall estimated resolution value. Resolution of remaining Rs 6,000 crore debt will move into FY23,” IL&FS MD, CS Rajan said.

Meanwhile, IL&FS’ headquarters at Bandra Kurla Complex in Mumbai has been sold to Brookfield for Rs 1,080 crore.

“One of the toughest things for me was on March 25 when we filed with NCLT for the sale of this iconic building,” said Kotak.

The government stepped in on October 2, 2018, to take control of crisis-ridden IL&FS. It moved the National Company Law Tribunal (NCLT) to supersede and reconstitute the board of the firm, which has defaulted on a series of its debt payments. The incremental resolution of over Rs 2,700 crore since November 2021 comprises Rs 1,080 crore from sale of IL&FS Headquarters (TIFC) in BKC Mumbai, Rs 900 crore under Khed Sinnar claim settlement with NHAI, Rs 230 crore from settlement of IFIN’s non-performing loan accounts and Rs 520 crore from other recoveries.

The overall resolution estimate of 62 per cent is double the average recovery of 31 per cent under IBC1. This has been largely possible due to the continued commitment of the new board led by Kotak and the management to preserve value in assets of national importance and maintaining going concern status.

The IL&FS group, in addition, continues to service debt of Rs 1,000 crore across companies. ITNL completed the transfer of two road assets (Sikar Bikaner Highway Limited and Moradabad Bareilly Expressway Ltd) to Roadstar Infra Investment Trust at a cumulative enterprise valuation of Rs 4,200 crore. Transfer of remaining SPVs to the InvIT is being undertaken in multiple phases, according to Rajan.

The new board of IL&FS continues to encounter several challenges in completing the resolution, which in turn, have impacted timelines, it said.

On the debt resolution process in the country, Uday Kotak said, “We need to get cracking on getting our judicial process to move much faster. It is a very serious challenge for the development of business in our country.”