Debt-laden IL&FS has requested liquidity support from its promoters such as Life Insurance Corporation of India (LIC) and State Bank of India (SBI) to repay its debts since its planned assets sales will take some time to materialise.

Hari Sankaran, Vice Chairman & Managing Director, IL&FS, in a video message reiterated the institution's three pronged strategy, which was disclosed in an August 29 statement, of having a successful rights issue to generate and enable the company to recapitalise itself, sell assets, which it has built over the last few decades to repay debts, and pending asset sales get liquidity support from promoters  to make debt repayments.

"In today's (31st) annual general meeting of IL&FS, we addressed several of the issues concerning our shareholders. these issues revolved around how we can restore normalcy to our operations....we sought support of shareholders in this endeavour."

Talking to reporters after the AGM, a shareholder, who wished not to be identified, said LIC, the single largest shareholder with over 25 per cent, and Japan’s Orix Corp, which owns a little over 23 per cent stake, would raise their ownership in the company by subscribing to the rights issue. Similarly, state-run lender SBI, too, has agreed to do so. SBI currently has the lowest stake, at around 7 per cent, in the company, he said.

IL&FS Employees Welfare Trust holds 12 per cent in the company. The Abu Dhabi Investment Authority, HDFC and Central Bank of India hold 12.56 per cent, 9.02 per cent and 7.67 per cent, respectively, in the cash-strapped company.

"The Board also approved the Company’s specific asset divestment plan based on which IL&FS expects to reduce its overall debt by Rs 30,000 crores. Out of a portfolio of 25 projects identified for sale, firm offers have already been received for 14 projects. The Company expects to complete its divestment plan over the next 12 to 18 months in a systematic and professional way to fulfill its commitments," said the statement.

According to the statement, the Board took cognizance of the fact that this situation of over-leverage and illiquidity had arisen as a significant percentage of the Group’s liquidity, aggregating to over Rs 16,000 crores, was stuck in claims and termination payments. And whilst Government had taken several measures to expedite settlement and streamline the process, in the nature of these matters, it would take two to three years more to unlock these pools of liquidity for the Company. In this context, and to enhance the liquidity position of the Company, the Board also approved approaching Shareholders for support to the extent of Rs 9,000 crores.

(With inputs from PTI)