The board at its first meet may try to address the immediate problem of liquidity
The newly-appointed board of Infrastructure Leasing & Financial Services (IL&FS) is expected to convene today to take stock of the situation before it comes up with a rescue plan to save the beleaguered infrastructure financer.
The board has a tough task at hand given the hundreds of subsidiaries with complicated holding structures and complex dealings with various entities and government bodies.
The board at its first meet may try to address the immediate problem of liquidity. There could also be a possibility of the board inducting new talent and may even seek help from outside by appointing legal and financial firms to get to the bottom of the group's problems before it can come out with a credible bail out plan.
Earlier this week, the Centre got a go ahead from the National Company Law Tribunal to supersede the existing board of IL&FS with its own nominees, led by Uday Kotak, Managing Director of Kotak Mahindra Bank.
The other members of the board are Vineet Nayyar, former Vice-Chairman of Tech Mahindra; GN Bajpai, former Chairman of the Securities and Exchange Board of India (SEBI); GC Chaturvedi, Chairman of ICICI Bank; and former IAS officers Malini Shankar and Nand Kishore. The government on October 3 appointed another retired bureaucrat CS Rajan, former Chief Secretary of Rajasthan, as the seventh member on the new board of directors of IL&FS.
According to available data, the company has Rs 91,000 crore of consolidated debt, of which Rs 3,500 crore repayments were scheduled this year. But things have started to unravel as the company started defaulting on debt repayments.
Saving IL&FS became imperative for the government as it tries to avert a Lehman Brothers like crisis to prevent the contagion spreading to other financial institutions such as banks and other NBFCs.IL&FS has a diversified shareholding. Life Insurance Corporation is the largest shareholder with 25.34 percent stake, while Central Bank of India, State Bank of India, HDFC, UTI, Orix Corporation of Japan and Abu Dhabi Investment Authority are the other shareholders.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.