The beleaguered IL&FS and its subsidiaries were in desperate need of funds last year. The huge debt in the books with rising short term loans meant replacement of debt every year. IL&FS needed longer term debt to correct its liquidity mismatches. But there was not much appetite for its long term resource raising. However, some institutions gave money to the group, but that was in the region of Rs 25 crore to Rs 200 crore. Big names like Kotak Mahindra Bank, ICICI Bank and few others extended a credit line through non convertible debentures (NCDs) at attractive interest rates. Take a look:
i) Inurance companies are always on a look-out for earning good returns. While general insurance gets short term funds, they always have a good float because of continuous inflows. In March this year, HDFC ERGO General Insurance Company, a leading general insurance firm, invested Rs 25 crore in the parent IL&FS by way of NCDs. The money was put in for five years at an ROI of 8.45 per cent per annum.
ii) Banks also run treasury operations to subscribe to papers with good returns. This boosts treasury income. In June this year, the leading private sector bank ICICI Bank and Mumbai-based NBFC Centrum Capital Ltd subscribed to the Rs 200 crore NCD issue of IL&FS. These NCDs carried interest rate of 9.15 per cent per annum.
iii) In August this year, IL& FS raised Rs 75 crore through Maharashtra State Electricity Boards Contributory Provident fund and Tipsons financial services. This money was invested for sever-year at 9.90 per cent per annum.
iv) The IL&FS energy subsidiary, IL&FS Energy Development, issued an NCD in May this year to Welspun Enterprises, ILKAL Cooperative Bank Ltd, Trust Capital Services Ltd and Trust Investment Advisors for close to Rs 200 crore.
v) In June this year, another subsidiary IL&FS Financial Services managed to get Rs 50 crore from Tipsons Consultancy services and SAIL Alloy steel.
vi) In September 2017, IL&FS Financial Services issued Rs 100 crore NCD to Kotak Bank , Janta Sahakari Bank and Canara Bank Employees Pension Fund.