The term of Uday Kotak, who was appointed as chairman of crisis-hit Infrastructure Leasing and Finance Ltd (IL&FS) is ending this week and the Union government has appointed CS Rajan, who is managing director (MD), as the new chairman for six months. Last year in September, the Union government extended by six months, the term of Mr Kotak as chairman of IL&FS to maintain continuity in the resolution plan being worked out for the indebted group. Mr Kotak is MD and chief executive officer (CEO) of Kotak Mahindra Bank.
Speaking with media in Mumbai, Mr Kotak says, the IL&FS group has addressed a debt of about Rs55,000 crore, or 90% if its original estimate of Rs61,000 crore. The group also maintained its earlier estimate of resolving debt of Rs61,000 crore, representing a resolution of 62% of the overall—fund-based and non-fund based—debt of over Rs99,000 crore as of October 2018.
In a release, IL&FS says, resolution of the remaining Rs6,000 crore debt will move into FY22-23. "Of the 347 entities under IL&FS Group as of October 2018, a total of 246 entities stand resolved leaving 101 entities to be resolved in the next financial year."
"An application has been filed with the National Company Law Appellate Tribunal (NCLAT) for undertaking interim distribution of Rs16,000 crore of cash and InvIT units available across the group. Over 75% of this would be distributed to creditors of three large holding companies - IL&FS, IL&FS Financial Services (IFIN) and IL&FS Transportation Networks (ITNL) - which have a large base of public fund creditors. This has been made possible on account of IL&FS' resolution framework and the underlying distribution formula," it added.
IL&FS has also sold its headquarter located in Bandra Kurla Complex (BKC) in Mumbai to Brookfield for Rs1,080 crore. It has given the letter of intent and the assets will be handed over to Brookfield in 2022.
It says, "The incremental resolution of over Rs2,700 crore since November 2021 comprises of Rs1,080 crore from sale of IL&FS headquarters (TIFC) in BKC, Mumbai, Rs900 crore under Khed Sinnar claim settlement with NHAI, Rs230 crore from the settlement of IFIN's non-performing loan (NPL) accounts and Rs520 crore from other recoveries. In addition, the group continues to service debt of Rs1,000 crore across companies."
"ITNL completed the transfer of two road assets, Sikar Bikaner Highway Ltd and Moradabad Bareilly Expressway Ltd to Roadstar Infra Investment Trust at a cumulative enterprise valuation of Rs 4,200 crore. Transfer of remaining special purpose vehicles (SPVs) to the IL&FS's Infrastructure Investment Trust (InvIT) is being undertaken in multiple phases," it added.
According to Mr Kotak, the new board continues to encounter several challenges in completing the resolution which, in turn, have impacted timelines. "Some of these are existence of complex share-holding arrangements and web of infra group borrowings, non-payment of dues by state utility to IL&FS Tamil Nadu Power Company Ltd (ITPCL), delay in receipt of annuities from some state governments, securing various consent from other stakeholders including lenders, shareholders and joint venture partners, coercive creditor actions, and ongoing legal proceedings by different lender groups, sub-contractors and authorities," he says.