The government will supercede the board of Infrastructure Leasing & Financial Services (IL&FS) group, an infrastructure conglomerate, in a Satyam-like rescue operation. The government will set up a 6-member board headed by Uday Kotak to rescue the debt-ladden company. The new board will also have former IAS officer and Tech Mahindra boss Vineet Nayyar, former Sebi chief G N Bajpai, former ICICI Bank chairman G C Chaturvedi, former IAS officers Malini Shankar and Nanda Kishore.
The government has intervened because the company’s failure could have cascading impact on the economy of the country affecting banks and mutual funds. The government of India sought National Company Law Tribunal (NCLT) nod to takeover IL&FS Management.
IL&FS, currently, has a debt pile of Rs 91,000 crore, out of which Rs 57,000 crore are bank loans most of which are from state-run banks. Following the default the company has come under the scanner of multiple regulators, including Sebi, for alleged defaults related to financial disclosures and corporate governance.
The group is said to have sought interim assistance from its government-run shareholders LIC and SBI, but opposition has come from several quarters for any bailout with the public money managed by these marquee public institutions.
As of March 2018, LIC and Orix Corporation of Japan were the largest shareholders of IL&FS with 25.34 and 23.54 per cent respectively. Abu Dhabi Investment Authority, HDFC, Central Bank of India and SBI held 12.56 per cent, 9.02 per cent, 7.67 per cent and 6.42 per cent, respectively.
(With PTI Inputs)