The crisis-hit Infrastructure Leasing and Finance Limited (IL&FS) group has addressed a debt of about Rs43,000 crore and is confident of addressing an additional debt of Rs14,400 crore, taking its total debt recovery to Rs58,000 crore by March next year.
In a presentation, IL&FS says, "Significant portion worth Rs50,000 crore of estimated recovery would be addressed by September 2021. We expect to address a debt of about 95% or Rs58,000 crore out of the estimated recovery of Rs61,000 crore by March 2022. Since there is a high number of residual entities with low recovery potential, it would remain beyond March 2022. The incremental recovery value in these 89 small entities is worth Rs3,000 crore and will take some more time and we are exploring all options to address this debt, but cannot put a timeline for the recovery."
IL&FS says, the aggregate addressed debt of Rs43,000 crore comprises Rs29,000 crore based on entity monetisation initiatives and accrued cash balance, Rs14,640 crore of additional net recovery expected from resolution and restructuring applications filed with and awaiting approval of the Mumbai-bench of National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) and Rs1,926 crore from the Supreme Court verdict passed in favour of Rapid Metro Gurgaon.
For June to September 2021, the new board of directors expects entity monetisation worth Rs4,360 crore and Rs3,340 crore from IL&FS's Infrastructure Investment Trust (InvIT), taking the total to Rs7,700 crore for the quarter. This involves 23 entities of the group.
For the next six months (till March 2022), IL&FS says, it expects to redress debt of 18 entities, including Rs2,050 crore through entity monetisation, Rs2,350 crore from InvIT, Rs1,200 crore through termination and Rs1,100 crore through real estate. For the six months’ period, the company expects to redress debt worth Rs6,700 crore.
As on 31 May 2021, IL&FS says it has available cash balance of Rs15,284 crore, including Rs1,925 crore received in June as interim termination payment from Haryana Shehari Vikas Pradhikaran towards the Gurgaon Metro Project.
During 2021, the group filed NCLT application for Phase 1 of IL&FS's Infrastructure Investment Trust (InvIT) with a resolution value of over Rs9,300 crore across six special purpose vehicles (SPVs) from the road sector.
Encompassing 12 road SPVs, the InvIT, which is being set up across multiple phases, represents one of India's largest such resolution initiatives and would contribute to significant value enhancement for IL&FS group stakeholders, it says.
The gross resolution value across all completed NCLT and NCLAT filings which awaits final approval amounts to over Rs20,450 crore.
By September 2021, IL&FS expects to monetise its stake in ONGC Tripura, Warora Chandrapur and Karyavattom Stadium, phase-2 of InvIT including five road SPVs, and receipt of expected settlement claims from road authorities for Khed Sinnar Expressway and Srinagar Sonmarg Tunnel.
Further, IL&FS sees recovery of around Rs10,000 crore to spill over beyond September 2021 due to various reasons, including procedural complexities.
Post-completion of major resolutions, the new board is considering distribution of all cash accrued and other distributable assets to creditors across the group. Further, it is evaluating a process administered by Reserve Bank of India (RBI) for IL&FS under existing legal options. This may include a core investment company (CIC) and a holding company for residual companies by IL&FS.
IL&FS was declared insolvent in September 2018 after it failed to honour its debt distributed among its 347 group companies. The complex nature of IL&FS and the risk it posed to the financial system has led to some new regulations. One among the regulations was RBI putting a cap of two CICs within a corporate group.
To address the complexity in group structures and existence of multiple CICs within a group, last year in August, RBI decided to restrict to two the number of layers of CICs within a group, irrespective of the extent of direct or indirect holding by a CIC.