IL&FS board appoints nominee directors for arms, starts austerity measures

The newly-constituted board, headed by veteran banker Uday Kotak, met for the second time on Friday

Infrastructure Leasing and Financial Services' (IL&FS') new board on Friday appointed nominee directors on various subsidiaries of the infra lending and engineering conglomerate.  

Further, it initiated austerity measures related to personnel and operating expenses in the company. 

The new board also approved the formation of a core operating committee under former vice-chairman of Tech Mahindra, Vineet Nayyar.  

The newly-constituted board, headed by veteran banker and MD & CEO of Kotak Mahindra Bank, Uday Kotak, met for the second time on Friday to decide on the further course of action for the cash-crunched company. 

In its maiden meeting held on October 4, the six-member board undertook an initial assessment of the ground reality of the company and discussed the way forward.

One unnamed source had told news agency PTI on Thursday that at the meeting, the board would be "looking into various issues, including fund-raising plan".

The firm needs an immediate capital infusion of Rs 30 billion and is also planning a Rs 45-billion rights issue.

Speaking to reporters after the first board meeting, last week, Kotak had hinted that the crisis at IL&FS was much more complex than earlier thought as the number of its subsidiaries and associates have more than doubled to 348.

"We undertook an initial assessment of the ground reality and the way forward. We'll meet frequently to implement the directions of NCLT and to prepare a roadmap and turnaround," Kotak had said.

According to the NCLT order, the board is required to give a roadmap for the company by October 31.

Kotak had said that the resolution will take some time and the board's focus is to preserve the fair value of the assets and the enterprise to the maximum extent.

On October 1, the government superseded the board of IL&FS and appointed a six-member board.

Apart from Kotak, the other members of the board include former Sebi chairman GN Bajpai, ICICI Bank non-executive chairman GC Chaturvedi, IAS officer and the director general of shipping Malini Shankar, Vineet Nayyar and veteran auditor Nandkishore. 

The company as of March 2018 owed over Rs 910 billion to banks and other creditors.