IL&FS' systemic structural flaw

Its status as a Systemically Important Core Investment Company created an opaque, hydra-headed organisation

The beleaguered IL&FS group has been in the eye of the storm since September last year for defaults in payment obligations of bank loans by group companies. What has also come under the scanner is the group’s complex corporate structure with 346 sub-companies under its ambit. This includes over two-dozen direct subsidiaries, 135 indirect subsidiaries, six joint ventures, four associate companies, among others.

Although most companies in the infrastructure business claim operating a multi-layered corporate structure is regular business practice, it may be worthwhile to check out how this hydra-headed organisation structure created opaqueness in group’s operations and its financials.