IL&FS Fin Services to auction Rs 5,000 cr external corporate loan book

Process of inviting bids to start next week for sale in cash; loans to over 70 companies have turned bad

IL&FS Financial Services (IFIN), the non-banking financial company arm of Infrastructure Leasing and Financial Services (IL&FS), is looking to sell its external corporate loan book through an auction.

The process for inviting bids will commence next week.

IFIN said in a statement that Rs 5,000 crore worth of corporate loans will be sold. The external loan book includes credit to over 70 firms that have turned non-performing assets.

Further, the sale will be an all-cash deal. This is part of the new board’s resolution process to address the overall debt burden. IFIN manages Rs 18,000 crore in assets, which includes both loans to group entities and external firms.

According to its FY19 annual report, IFIN’s loan book stood at Rs 12,945 crore, of which 96 per cent was non-performing. According to a report presented by the IL&FS board to the National Company Law Appellate Tribunal, gross non-performing assets (NPAs) stood at 97 per cent of overall loans (as of November 2019).

In the affidavit, the board said it had recovered Rs 1,380 crore from around 30 third-party borrowers and group firms.

As of September, the new board had resolved debt worth more than Rs 19,000 crore, vis-à-vis its target of Rs 26,440 crore. The deficit of Rs 7,300 crore has been rolled over to subsequent quarters. In the July-September quarter, the board resolved debt to the tune of Rs 1,460 crore.

The IL&FS group, led by Uday Kotak, aims to resolve Rs 56,300 crore of debt — which is more than 50 per cent of the total debt — against an earlier target of Rs 57,240 crore. While Rs 50,300 crore is expected to get resolved by March 2021, the remaining Rs 6,000 crore will take longer.