Government takes IL&FS to NCLT, seeks dismissal of Board

Rahul Gandhi

The Central government on Monday moved the top corporate tribunal to change the management of the beleaguered IL&FS. According to sources, the matter has been listed in the National Company Law Tribunal (NCLT), Mumbai, for hearing later in the day. The debt-ridden IL&FS has been taken to the NCLT, Mumbai, by the Ministry of Corporate Affairs, the sources told IANS here.

The development comes a day after Congress President Rahul Gandhi alleged that public money was being used to bail-out IL&FS. In a tweet on Sunday, Gandhi alleged that Prime Minister Narendra Modi was bailing out the IL&FS group which has a long-term debt liability of around Rs 91,000 crore via public savings in LIC and the State Bank of India (SBI). The Congress has raised the issue and warned of "an impending 'Lehman Brothers-type' economic crisis facing the country".

The party has also called for a forensic audit of the group over the disbursement of Rs 42,000 crore in the last four years. The call for an audit comes at a time when concerns have been raised regarding the financial stability of the group after some of its subsidiaries defaulted on commercial paper repayment obligations. On Saturday, the cash-strapped company said it was planning to have a "successful" rights issue and would sell its assets to repay creditors.

The company in its Annual General Meeting sought shareholders' permission to carry out its plans to recapitalise itself. Recently, IL&FS Financial Services, a group company, defaulted in payment obligations of bank loans (including interest), term and short-term deposits and failed to meet the commercial paper (CP) redemption obligations due on September 14.

On September 15, the company reported that it had received notices for delays and defaults in servicing some of the intercorporate deposits accepted by it. Consequent to defaults, rating agency ICRA downgraded the ratings of it's short-term and long-term borrowing programmes.

IL&FS Ltd is a core investment company and serves as the holding company of the IL&FS Group, with most business operations domiciled in separate companies which form an ecosystem of expertise across infrastructure, finance, and social and environmental services.

Initially promoted by the Central Bank of India, Housing Development Finance Corporation Ltd and the Unit Trust of India, IL&FS was incorporated in 1987. Over the years, it has inducted institutional shareholders including SBI, LIC, ORIX Corporation of Japan and Abu Dhabi Investment Authority (ADIA).

As on March 31, 2018, LIC and ORIX Corporation are the largest shareholders in IL&FS with their stakeholding at 25.34 percent and 23.54 percent, respectively. Other prominent shareholders include ADIA (12.56 percent), HDFC (9.02 percent), CBI (7.67 percent) and SBI (6.42 percent).

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