IL&FS Group is working towards addressing a 'significant portion' of the outstanding debt of Rs 94,000 crore by July 2020, its chairman Uday Kotak said on December 31. The veteran banker said the company has emerged as a 'test case' on group-wide resolution of stressed assets.
"The new board is committed to completing the resolution process at the earliest and is working towards addressing a significant portion of addressable debt by July 2020," Kotak informed the shareholders at the 32nd annual general meeting.
This is the first AGM conveyed by the new board.
In October 2018, the government had seized control of the debt-trapped company and superseded its board with one led by Kotak.
As of October 8, 2018, the group had an external fund-based debt of Rs 94,216 crore and an additional non- fund-based debt of Rs 5,139 crore.
Kotak said the absence of requisite legal framework for group resolution under IBC required the board to propose the first-of-its-kind resolution framework that balanced interest of stakeholders across classes and levels, while keeping broad principles of corporate finance in mind.
The board has adopted a three-pronged strategy- resolution, restructuring and recovery, he said.
For the fiscal ended March 31, 2019, the Group reported a standalone net loss of Rs 22,527 crore, as against net profit of Rs 333 crore in the previous fiscal.
Kotak further said the new board expects that measures undertaken so far would result in overall recovery in the region of 50 per cent of the outstanding debt as of Sep 30, 2018.
While highlighting and challenges and progress made through the resolution process of the group, he said, "IL&FS Group had emerged as a test case on group-wide resolution of stressed assets."
He said the group has received binding bid for Chinese road asset that will resolve nearly Rs 1,600 crore debt and additional Rs 980 crore towards equity value for the shareholding entity.
The group has sold its stake in seven wind power special purpose vehicle (SPVs) for nearly Rs 4,300 crore, covering 100 per cent of entity-level debt and including equity value of nearly Rs 590 crore.
It has received binding bids received for 10 road assets. Of the 10 assets five assets with combined financial debt of Rs 9,500 crore have been referred to respective creditor committees.
Infrastructure Investment Trust (InvIT) has been set-up for nine road assets with total financial debt of over Rs 11,000 crore.
He said approval has been received from the Gujarat government to purchase IL&FS Group's stake in GIFTCL, resolving debt of nearly Rs 1,200 crore.
The group has been able to reduce its wage bill by 48 per cent and operating expenses by 42 per cent, on an annualised basis, between October 31, 2018 and October 31, 2019.
Debt restructuring completed for 3 assets with total debt of Rs 5,100 crore.
He said the group's cash reserve stood at Rs 6,500 crore as on November 30, 2019 - with nearly 87 per cent of these funds parked in instruments like fixed deposits, money market mutual funds.
Kotak further said the board will continue to work closely with the government and various investigating agencies to address past issues.