Crisis-hit IL&FS to start getting money from PSUs in a few months

Public sector companies will start paying their dues to crisis-ridden Infrastructure Leasing & Financial Services (IL&FS) in 60 days, according to senior corporate affairs ministry officials.

They said while there would be no bailout from the government, it would ensure public sector entities such as the National Highways Authority of India (NHAI) pay in a timely fashion.

A senior official of the ministry said most of the exposure of IL&FS was to public sector undertakings and hence the easiest way of helping the company was asking them to pay without delay.

IL&FS needs at least Rs 1 billion a month just to stay afloat.

IL&FS and the NHAI are in arbitration over their disputes on debt of Rs 70 billion. The consolidated debt of IL&FS increased to Rs 910.91 billion in 2018 from Rs 486.71 billion in 2014.

The interest outgo rose to Rs 79.22 billion from Rs 39.70 billion during the same period. The company has not been making enough profits to take care of its interest, leading to the default. Of the Rs 910 billion debt, Rs 570 billion has been borrowed from public sector banks.

Last week, the National Company Law Appellate Tribunal (NCLAT) had overturned an order of the National Company Law Tribunal (NCLT) on the government’s plea for a three-month moratorium on its debt payment to lenders.

Meanwhile, the Serious Fraud Investigation Office (SFIO) will submit its report on IL&S to the ministry in phases, sources said.

The SFIO is looking into “financial irregularities” at Infrastructure Leasing & Financial Services (IL&FS).

It is also probing irregularities by IL&FS in inter-corporate deposits (ICDs).

LIFE AFTER CRISIS

• The firm needs at least  Rs1 bn a month just to stay afloat
•  Though there would be no bailout from govt, it would ensure public sector entities such as the NHAI pay in a timely fashion
• IL&FS and the NHAI are in arbitration over their disputes on debt of Rs 70 bn

IL&FS has defaulted on interest and principal on inter-corporate deposits (ICDs) of Rs 1.72 billion, which became due recently. For the first time, the company defaulted on ICDs in June. It also defaulted on Rs 10 billion raised from SIDBI in the ICD market.

The company has ICDs of Rs 14 billion. 

ICDs are part of unsecured borrowings from other corporate entities.

IL&FS has in aggregate Rs 38.5 billion of unsecured loans, with commercial paper accounting for the biggest chunk at Rs 20 billion.