IL&FS crisis: ITNL Africa Projects made losses, no operational revenue

ITNL Africa had been working on a road project connecting three Nigerian states of Kwara, Niger and Kaduna

Beleaguered infrastructure company Infrastructure Leasing & Financial Services (IL&FS) Nigerian arm ITNL Africa Projects recorded no operational revenue in all the years since inception, while racking up losses. 

An analysis of its financial statements showed multiple delays from the government and due to other causes which resulted in difficulty in continuing as a going concern-symptomatic of the group’s issues in India as well. ITNL Africa Projects has been pursuing a road project for which the government of Nigeria is still considering the proposal, according to the company’s last financial report. The company was set up in 2012. It attributed the slow pace of the project to the change in the government in its latest financial report. A drop in crude oil prices is a negative for the country, which is Africa’s largest oil producer. Crude price fluctuations affected infrastructure projects in the country, but ITNL Africa Project’s last annual report said that there have been efforts to keep the project going, noting that the country’s infrastructure bank has been raising capital for the funding of such projects. 
 

Meanwhile, the company had completely eroded its net worth after accumulating losses of Rs 183.8 million. Auditors classified it as a going concern based on parental support. 

“The company is assured of continuing operational and financial support from its intermediate Holding Company vide its letter dated May 2, 2018, which is effective for a period of 12 months,” said the company’s financials. 

It also noted that the Nigerian government issued a no-objection letter for continuing to work on the project. The 480-kilometre road project connects the three Nigerian states of Kwara, Niger and Kaduna through multi-lane roads. But subsequent approval seems to have been slow in coming.

“…however no further communication is received…and the project is still pending approval under procurement stage,” it said. 

Singapore-based ITNL International Pte Ltd has a 99.5 per cent stake in the company. The remaining is held directly by IL&FS Transportation Networks Limited (ITNL). 

Distressed and special situation specialist REDD Intelligence in a report analysing the Infrastructure Leasing and Financial Services Ltd. group noted that the Nigerian entities Singapore-based shareholder also has a stake in other projects. 

“The major assets are a 49 per cent stake in Chongqing Yuhe Expressway, the value of which was estimated at USD 288m by CFO Dilip Bhatia in a conference call with analysts in February 2018. Other international assets include a 100 per cent stake in Spanish infra firm Elsamex,” said the September 27, 2018, note authored by senior analyst GD Agarwal. 

ITNL International Pte had a net loss of Rs 192.44 million in 2017-18 shows notes the IL&FS annual report. 

An email sent to the company did not receive a reply. 

Trouble abroad

• African arm supposed to build road in Nigeria 
• Multiple hiccups in getting project going
• Losses continued to accumulated 
• Net worth has been completely eroded  
• Parental support had kept the company going 
• Still awaiting government clearances, shows last report