The government has levelled charges of mis-management and mis-governance on the IL&FS board while justifying its move to remove the existing board and instate a new six-member board.
One of its allegations against the earlier board was that "the company continued to pay dividends and huge managerial pay-outs regardless of looming liquidity crisis". The government said that this shows that the management had lost total credibility.
A look at the annual report of the company suggests that the average percentage increase in the managerial remuneration was 66 per cent in 2017-18. While the average percentage increase in the salaries of employees other than managerial personnel during the year was 4.44 per cent.
Ravi Parthasarathy, the Chairman, got a 144 per cent jump in remunerations last year, while Hari Sankaran, Vice-chairman and managing director, got a 3.86 per cent hike and Arun K Saha, Joint Managing Director & CEO, 10.43 per cent hike. Parthasarthy's total salary in 2017-18 was Rs 26.3 crore, while Sankaran's salary was Rs 7.7 crore.
In the previous year, though, both Parthasarthy and Sankaran took a cut of 2 per cent and 4.5 per cent, respectively. The average percentage increase in the salaries of employees other than managerial personnel in 2016-17 was 1.76 per cent and the average percentage increase in the managerial remuneration was 0.22 per cent.
As on March 31, 2018, the company had 131 permanent employees on its payroll other than three whole-time directors of the company.
Meanwhile, the board of the company at its meeting held on August 29, 2018 had recommended a final dividend of 10 per cent on the paid up equity share capital of the company for 2017-18. In the previous year, the board had recommended a dividend of 42.5 per cent.
The company paid dividend of Rs 65.70 crore in 2017-18 compared to Rs 169 crore in the previous year.
The company posted a standalone profit of Rs 584 crore in 2017-18 compared to Rs 383 crore in the previous year. It has 24 direct subsidiaries, 135 indirect subsidiaries and 6 joint ventures.
The government in a press release has said that IL&FS Group has infrastructure and financial assets exceeding Rs 11,5000 crore and is struggling to service around Rs 91,000 crore in debt "which is the outcome of its mismanaged borrowings in the past."
The statement further said that "the financial mismanagement of the IL&FS is apparent from its rapid debt built up and misrepresentation of true state of financial fragility, which is being reflected in unprecedented rating downgrade from highly rated to a default category."