Herculean task! Uday Kotak-led IL&FS board draws resolution plan for 70 entities with Rs 36,500 crore debt

Exactly a year ago, the government swung into action to supersede the board of Infrastructure Leasing and Financial Services (IL&FS), which faced a series of defaults in payment of its debt. The collapse of a large institution like IL&FS had a knee jerk reaction as the trust of investors especially mutual funds, insurance, HNIs and banks was completely broken. The collapse of IL&FS actually resulted in a credit freeze in the NBFC sector, which still continues.

On October 4, the new board under the chairmanship of Uday Kotak, who took charge at the Mumbai-headquartered infrastructure financing institution, will complete a year. The board has managed to put together a resolution plan for some 65-70 entities with a total debt of Rs 36,500 crore. This includes eight wind SPVs being sold to Japanese ORIX for Rs 4,300 crore. The targeted closure is October 20, 2019. In fact, the biggest achievement of the board was to maintain the going concern status for all the companies. They also managed to secure a moratorium from NCLT for any proceedings against the group companies.

In the domestic transportation business (road projects), there are binding bids for five projects with a total debt of Rs 9,500 crore. The banks' committee of creditors will take a final call on the resolution. There are 9 projects where the total debt is Rs 10,800 crore the board has initiated alternate resolution options including InvIT, which is being considered. In the education vertical, binding bid of Rs 630 crore is received for four assets. The banks' committee of creditors will aslso take a call on this. There are some 47 entities that are servicing all the obligations. There are also some 9 entities with low and no bids.

It was a herculean task for the new board. In fact, the board met 25 times in the last year - almost twice every month. They also strengthened the management team, conducted a forensic audit and managed cost rationalisation. The wage bill was reduced by 45 per cent and office space was consolidated. The board is now targeting to achieve resolution for a significant quantum of debt by March 2020.

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