The Uday Kotak-led board of Infrastructure Leasing and Financial Services (IL&FS) is taking a string of steps — from selling stakes in subsidiaries and real estate to reducing wage bills — to raise about Rs 16,000 crore as it battles to show progress to lenders who want concrete steps towards monetisation, said two persons familiar with the matter.
The company would sell IL&FS Education, IL&FS Technologies, ONGC Tripura Power Company and IL&FS Paradip Refinery Water Limited in the coming weeks and is also looking to monetise overseas assets, said the persons on condition of anonymity.
Sale of these assets may generate Rs 8,000-10,000 crore, according to initial estimates. Another Rs 400-500 crore is expected from the sale of its securities business, and roughly Rs 8,000 crore from the renewable energy business. These are enterprise values and there can be transactions where the company may not get any value for its equity.
IL&FS submitted its progress report to the National Company Law Tribunal (NCLT) on Monday, which passed an interim order asking nine former senior executives to disclose assets in the next three weeks.
Among its international subsidiaries, Elsamex SA, a Spanish road company owned by IL&FS Transportation Networks Limited (ITNL) has received a binding offer for an asset — A4, a JV with a concession agreement for a road project in Madrid.
ITNL, the group holding company for roads, has initiated the process to sell stake in IIPL USA LLC, which is engaged in operations and maintenance (O&M). The board has appointed JM Financial and Arpwood Capital as financial advisors while Alvarez and Marsal is working on the resolution plan. IL&FS said it would not like to comment.
The government has sacked the board of IL&FS citing mismanagement in October and appointed one led by Kotak to resolve the crisis. The company has a debt of Rs 91,000 crore.
Since October 31, the newly constituted board has cut down lease rentals and closed offices at various locations. They are looking at leasing out office premises in the IL&FS Financial Services Centre in Mumbai to generate revenue of around Rs 13.5 crore a year. The board is identifying the actual structure, financial position and contours of the IL&FS Group. It is looking to reduce manpower by 65% and cut wage cost by 50% through salary rationalisation, separation of superannuated consultants, talent restructuring and merging roles.
On Monday, the ministry of corporate affairs’ counsel Sanjay Shorey told NCLT that around 46 companies have either ceased to exist or ceased to be part of the IL&FS Group since constitution of the new board. Of 301 companies, the Kotak-headed committee has reviewed more than 165 entities and close to 100 of them have operational cash gap till March 31, 2019.
NCLT has scheduled the next date of hearing on January 16.