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Things are turning from bad to worse for Infrastructure Leasing & Financial Services Ltd, which is on the verge of defaulting on more borrowings. One of the group companies, IL&FS Financial Services, has already been banned from accessing the commercial paper market till February 2019, as it had defaulted on its short-term borrowing.
According to industry sources, IL&FS could be in default of inter-corporate deposits from the Small Industries Development Bank of India. The sources said that SIDBI may ask IL&FS to give a repayment plan ahead of the board meeting on Saturday. According to a Bloomberg report, this default is in the range of ₹300 crore and it has an additional ₹150 crore inter-corporate deposit payment due on Friday.
Letter to employees
Meanwhile, in a communication to its employees, IL&FS said its current liquidity woes arose because ₹16,000 crore of the Group’s funds is stuck in claims and termination payments.
“Our monies were used to fund the cost and time overruns caused by Concession Authority delays in handing over Right of Way. It is our case that if Concession Authorities release these (our) monies, we would not be in the situation we are in. What makes the situation worse is that none of the recpaitalisation plans fructified,” the management communication said.
With its money stuck and no new capital to raise more money, the Group faces financial stress.
“This crisis has been brewing for some time now and with every attempt to rectify the situation coming to naught, it came to a head this quarter. Obviously, much depends on this infusion of liquidity,” the communication.
The letter described the special audit by RBI on the Group as “routine” inspection.
The consolidated debt of the diversified yet unlisted conglomerate is estimated at ₹1-lakh crore. CARE Ratings has downgraded various debt instruments and bank facilities (aggregating ₹14,249 crore) of IL&FS. It cited build-up of liquidity pressure on the Group due to the delay in raising funds.
IL&FS had called for an emergency board meeting last Friday, but it remained inconclusive as the shareholders could not agree on the way forward. The board was divided on the issue of seeking fresh funding of around ₹3,000 crore from the key shareholders, LIC and SBI.
Last month, the IL&FS board approved a rights issue of 30 crore equity shares at ₹150 apiece aggregating to ₹4,500 crore. The issue is to be completed by October-end.
Asset divestment plan
The company is also embarking on an asset divestment plan to reduce its overall debt by ₹30,000 crore.
Out of a portfolio of 25 projects identified for sale, firm offers have been received for 14 projects. The company expects to complete its divestment plan over 12-18 months.
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