IL&FS has given single-digit returns on equity for at least five years

The clean-up now underway may do well to concentrate on key subsidiaries, a handful of which have contributed to the majority of the losses

The financials of IL&FS reveal that the company has been showing modest return on equity for a while now (chart 1). Return on equity has been in single-digits for at least five years, suggesting that shareholders have had trouble squeezing returns out of their capital.

The company continued to pile on debt, however. Losses picked up in the last financial year (FY18) to the point where it was no longer able to meet interest costs (chart 2).

Planned asset sales and partnerships did not materialise on time, precipitating the crises leading to its defaults.