Cash-strapped Infrastructure Leasing and Financial Services (IL&FS) Group on Monday said it expected to address over Rs 57,000 crore of its debt, which is around 57 per cent of its overall debt of Rs 99,000 crore, in the cmonths to come.
Of this, the group estimates to address close to Rs 50,500 crore of its debt by March 2021, and an additional debt of Rs 6,600 crore beyond FY21. However, it did not give any timeline for addressing the additional debt of Rs 6,600 crore.
The group shared its estimates of debt which to be addressed over the next three quarters.
Speaking about the new plan to address debt, the group’s non-executive chairman Uday Kotak said: “We are transparently putting out things that we see today and our reasonable estimate of how things look as we go forward. We are committed to this road map and we will go all out as IL&FS board and management to make it happen.”
Till June 30, 2020, the debt-laden company had addressed a debt of Rs 17,640 crore, or around 18 per cent of its total debt, through a combination of asset sales, debt repayment to green entities, debt discharged in non-green entities and available cash balance across the group.
The board shared a quarterly plan that estimates addressing additional debt of Rs 8,800 crore by second quarter of FY21, Rs 18,000 crore by the third quarter of FY21 and over Rs 6,000 crore by the end of fourth quarter of FY21 — aggregating to Rs 50,500 crore by end-FY21.
It further said efforts towards resolution of additional debt of Rs 6,600 crore are likely to continue beyond FY21 as the board expects the resolution of major holding companies to take a longer time.
“This is the game plan we have given considering the risks, to the best of our judgement,” Kotak said.
The revised value accounts for around 57 per cent of overall debt and is significantly higher than the average realization till date for financial creditors under the Insolvency and Bankruptcy Code (IBC) process, the group said.
It has proposed to set up one of the country’s largest infrastructure investment trusts (InvITs) with a target gross value of Rs 13,000 crore. It includes three special purpose vehicles (SPVs) where debt of Rs 5,000 crore has been restructured.
The group is in advanced stage of concluding the sale process of 15 entities with resolution of nearly Rs 8,500 crore and plans restructuring of additional debt of Rs 4,900 crore.
The number of subsidiaries of the group has reduced to 276 from 347 earlier. It expects it to further come down to around 60 by March 2021.
The government, in 2018, had seized control of the debt-strapped group and superseded its board with the one led by Kotak.
The group’s board has developed a group resolution framework that received National Company Law Appellate Tribunal’s (NCLAT) approval on March 12, 2020.
Kotak said the group is facing challenges in recoveries in its non-banking finance company IL&FS Financial Service (IFIN), where loans were given to large companies that are themselves in deep trouble.
Of the total balance sheet of Rs 16,000-18,000 crore, IFIN’s book is highly concentrated to a few large groups. This is in addition to the lending to group entities, he said.
“Those IFIN loan recoveries are turning out to be one of the most difficult aspects because of the situation and the quality and the characteristics of borrowers, which we as a new board cannot understand the logic and the prudence why these loans were given in the first place.”
“We have virtually got zero recoveries on some of those large loans. Some of them are in excess of Rs 1,000 crore or higher,” Kotak said.
The Covid-19 pandemic has in some ways delayed the progress in resolution of the group’s assets, he said, adding, “But we are chugging along. We are not giving up and I believe that the whole roadmap put out by IL&FS management and board is something we are deeply committed to.”