Uday Kotak-led IL&FS on the road to recovery, hopes to resolve Rs 57,000 crore of debt this fiscal

Over Rs 57,000 crore of this amount would be resolved through multiple resolution modes. (File image)

The IL&FS board, led by Uday Kotak, on Monday revised the quantum of debt it expects to resolve to Rs 57,000 crore, more than half the total debt of Rs 99,000 crore. Of this, Rs 50,500 crore will be addressed by March 2021, the board said while revised the debt estimates to Rs 99,000 crore. Over Rs 57,000 crore of this amount would be resolved through multiple resolution modes.

The revised value is significantly higher than the average realisation so far, for financial creditors under the IBC process, the company said. Addressing the media on the progress of the ongoing resolution process, Uday Kotak, non-executive chairman, IL&FS, said the purpose of the update was “to have a sense of transparency, accountability both on behalf of the new board and the current whole-time management at IL&FS”.

Lenders to the stressed IL&FS Group will be key beneficiaries, as the amount being addressed is higher than earlier estimated, despite the challenges posed by the ongoing pandemic.

Till June 2020, Rs 17,640 crore of the debt has already been addressed and it ceased to be non-performing assets on the books of lenders. The board of IL&FS plans to address 50% of the total debt in the current financial year by March 31, 2021. The group is undertaking several modes to address the debt through sale of entities, infrastructure investment trust (InvIT) for road assets, monetisation of real estate, debt restructuring, termination of projects and winding up of entities, among others.

As part of the resolution efforts, IL&FS proposes to set up one of the country’s largest InvITs with a target gross value of Rs 13,000 crore, which includes 3 SPVs where debt of Rs 5,000 crore has been restructured. The group is in an advanced stage of concluding the sale process of 15 entities with resolution of nearly Rs 8,500 crore and plans restructuring additional debt of Rs 4,900 crore.

Highlighting the key initiatives and progress made till June 30, 2020, CS Rajan, managing director, IL&FS, said nearly 18% or Rs 17,640 crore of debt has been addressed so far, of the overall debt. “The number of entities have been reduced from 347 to 276 as on June 30, 2020,” he said. The plan is to take it down to around 60 by March 31, 2021.

IL&FS was found with 347 subsidiaries and associates when the new board had taken over the reins of the group in October 2018.

Among the modes adopted for resolution of debt, 61 entities with debt of Rs 278 crore have been identified for winding up, while 11 road projects with debt of Rs 6,035 crore have been identified for termination. “The group has already received Rs 400 crore in two roads and NHAI (National Highways Authority of India) settlement of over Rs 2,000 crore has received an in principle approval in three roads,” Rajan said.

Further, the debt restructuring process is currently on in case of three group companies with debt of Rs 9,382 crore and real estate monetisation for eight entities with Rs 473-crore debt will also to be undertaken. Around 23 domestic entities with a debt of Rs 4,821 crore and 48 offshore entities with a debt of Rs 1,048 crore have already been resolved so far through sale, insolvency or liquidation, Rajan said. “We have identified 13 entities with Rs 9,042 crore debt for InvIT (road assets) and 47 entities with Rs 13,531 crore debt will be resolved through monetisation, stake sale,” Rajan added.