IL&FS Scam: Full Reports of SFIO and MCA Uploaded
The ministry of corporate affairs (MCA), in its submission before the National Company Law Tribunal (NCLT), has revealed details of its finding on several instances of misreporting of income, dubious transactions, conflict of interest, ever-greening of loans and rampant personal enrichment of key employees, including Ravi Parthasarathy, Hari Sankaran, and Arun Kumar Saha, besides others. 
 
The MCA, quoting interim report from the Serious Fraud Investigation Office (SFIO) says, "IL&FS and its main subsidiaries had the same set of persons as controlling officials who have been at the helm of the affairs for a long period. As part of the governance structure, the board of directors of all key IL&FS group companies had constituted committee of directors (CoD), which was empowered to take decisions pertaining to the operations of that respective entity. The CoD of important subsidiaries comprised of managing directors (MDs), joint MDs, and executive directors (EDs) of IL&FS to deal with all on-going operational matters, including credits and investments."
 
"....the set of officials of the holding company, were the decision makers and 'the controlling will and mind' for most of the other group companies, especially at the direct subsidiary level or companies having substantial operations, and the IL&FS Employee Welfare Trust. These other group companies practically acted as departments of their respective holding companies, rather than functioning as separate legal/ business entities.
 
The interest of the holding companies were held supreme, many a times at the cost of their subsidiaries, joint ventures or associates," the report from SFIO says.
 
In the interim report, the SFIO had stated,"...it is evident that IL&FS procured funds from the market through short-term instruments and invested in its group companies by way of giving long-term loans and advances, which was prejudicial to the interest of IL&FS, in terms of financial solvency. During these distressed times, IL&FS and its key subsidiaries such as IL&FS Financial Services Ltd (IFIN) and IL&FS Transportation Network Ltd (ITNL) were contained to raise short-term market funding through commercial papers or inter corporate deposits based on its bogus and fictitious but good credit rating and these short-term loans were passed to its project special purpose vehicles (SPVs) or group companies, for helping them service their debt obligations, management fully aware, thereby hid and avoided possible defaults resulting into increasing indebtedness on a standalone basis."

"This is virtually an act of fraud causing indebtness of IL&FS to over Rs91,000 crore. This indebtness is deliberate, wilful, fraudulent act of directors who were the mind controlling the affairs of IL&FS with intention to defraud creditors, who too had failed in their due diligence. An increasing level of indebtness of IL&FS, year after year, was sufficient red flat for the creditors to prevent further loans and advances. Such discriminator acts of lenders have provided long rope to the directors in control of affairs to put IL&FS in coma," the report added.
 
Since the submission by MCA is widely available with the media and is widely circulated, we are putting it out in public interest. 
 
 
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IL&FS Crisis: Govt Seeks Freezing & Attachment of Properties of Key Executives Ravi Parthasarathy, Hari Shankaran and Others
The government on Monday sought attachment of properties of a few more directors of debt-ridden Infrastructure Leasing & Financial Services (IL&FS). The counsel for the ministry sought to freeze all assets, securities, lockers, bank accounts of Ravi Parthasarathy and Hari Shankaran.
 
Top executives from IL&FS group who were made parties to the case include Vibhav Kapoor, Pradeep Puri, K Ramchand, S Rangarajan, RC Bawa and Mukund Sapre. The government is also seeking attachment of movable and immovable properties of these top executives of IL&FS group.
 
During the hearing, the National Company Law Tribunal (NCLT) agreed to make these executives as parties to the case and allowed the company application to make all of them respondents in the case.
 
Earlier, the ministry of corporate affairs (MCA) filed its interim report on the IL&FS case, naming several high-profile individuals and 302 group companies as respondents. The MCA, in its report mentioned that 39 companies that were listed as part of IL&FS have ceased to be group companies and Serious Fraud Investigation Office (SFIO) is probing the matter. 
 
The counsel for the government told the Tribunal that interim probe shows manner in which fund diversion took place at IL&FS. While Kapoor was the chief investment officer of IL&FS, Ramchand was the managing director (MD) of IL&FS Transportation Network. Rangarajan was the MD and chief executive (CEO) of IL&FS Securities, Sapre was the executive director of IL&FS Transportation Networks Ltd (ITNL), while Bawa was the MD of IL&FS Financial Services. Puri, an officer from the Indian Administrative Services (IAS) was the chairman of IL&FS Water Ltd.
 
Last week, IL&FS initiated the process to sell its renewable energy business and has invited expression of interest (EoI) proposals from prospective buyers. IL&FS's assets from the renewable energy business put on the block include, operating wind power generating plants with aggregate capacity of 873.5MW, and its under-construction wind power generating plants with aggregate capacity of 104MW. Its asset management services for the wind power generating plant, business division that carries out project development and implementation of wind power plants will also be sold.
 
Last month, several lenders of IL&FS had opposed the 90-day moratorium over loans taken by the debt-laden group and its subsidiaries. Lenders also requested the National Company Law Appellate Tribunal (NCLAT) to allow them not to classify IL&FS accounts as non-performing assets (NPAs) in case of defaults.
 
However, there was no decision and the NCLAT fixed 17th December as next date of hearing. 
 
During October, the NCLAT had stayed all proceedings against IL&FS group and its 348 group companies till further orders, over an urgent petition moved by the government.
 
Earlier, the ministry of corporate affairs had approached the appellate tribunal after the Mumbai bench of NCLT turned down its plea to grant 90-day moratorium over the loans taken by IL&FS and its subsidiaries. On 1 October 2018, the NCLT suspended the board of IL&FS on the government's plea and authorised reconstitution of the board by appointing seven directors two days later.
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COMMENTS

tanay

2 weeks ago

Are Ravi Parthasarathy and his cronies in India? Also, why haven't they spoken on this issue even once yet?

IL&FS invites Proposal for Selling Assets from Renewable Energy Business
Debt-laden Infrastructure Leasing & Financial Services (IL&FS) has initiated the process to sell its renewable energy business and has invited expression of interest (EoI) proposals from prospective buyers.
 
IL&FS's assets from the renewable energy business put on the block include, operating wind power generating plants with aggregate capacity of 873.5MW, and its under-construction wind power generating plants with aggregate capacity of 104MW. Its asset management services for the wind power generating plant, business division that carries out project development and implementation of wind power plants will also be sold.
 
IL&FS is also selling its businesses relating to project development and implementation of solar power generating plants and projects under development of approximately 300MW capacity solar power plants for corporates, the group said in a release.
 
As per the statement, the proposed stake sale may be carried out as a basket or individually or any combination.
 
"In order to ascertain market interest and to examine feasibility of maximisation of value in an orderly and transparent manner, the Board, acting on behalf of its relevant subsidiaries, has today initiated the process of exploring the sale of controlling stake(s) held by IL&FS Group in renewable energy assets or businesses...," the company said in the statement.
 
The decision is based on the report prepared by the new board of IL&FS which was submitted to the ministry of corporate affairs and, in turn, to the national company law tribunal (NCLT).
 
"As stated in the said report, it is the objective of the board to achieve, by one or more plan(s), the resolution of the IL&FS group through certain measures, including asset divestment," the statement said.
 
IL&FS's board has appointed Arpwood Capital Pvt Ltd and JM Financial Ltd as financial & transaction advisors, along with Alvarez & Marsal as resolution consultants.
 
Earlier this week, the debt-ridden group had said that it has received over a dozen EoI towards acquiring its stake in IL&FS Securities Services Ltd (ISSL) and ISSL Settlement and Transaction Services Ltd (ISTSL).
 
IL&FS had started the asset monetisation process a fortnight ago, towards developing a resolution plan for the IL&FS Group. The last date for receipt of EoI was 23 November 2018.
 
On 24th November, corporate affairs secretary Injeti Srinivas said that following an 'overwhelming response' to buy units of the debt-ridden company, State-appointed will soon put on sale another 8 to 10 subsidiaries.
 
IL&FS group had a debt of more than Rs91,000 crore at the end of March 2018.
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