Tag: IL&FS

IL&FS Financial Services to sell bad loans worth Rs 4000 crore, BFSI News, ET BFSI

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IL&FS Financial Services, an arm of IL&FS, has put on the block Rs 4,297 crore of loans that have been classified as non-performing assets. The finance company has said that the 62 loans will be sold all together for an upfront cash payment. Interested parties have been given until October 19 to submit a binding bid.

Last week, the RBI allowed lenders to sell even those loan accounts that have been classified as fraudulent. The loans that IL&FS is trying to sell are those advanced to third-parties that are not part of the group. The financial services arm has also advanced loans to group companies which are non-performing.

According to sources, the scope of recovery in these loans is limited. In July the board had said that it expects to recover Rs 58,000 crore or 95% of the recovery target by March 2022. The group’s overall debt stood at Rs 99,000 crore as of October 2018, of which it expects to recover Rs 61,000 crore.

A presentation on the recovery update filed by IL&FS said the corporation plans to recover Rs 2,250 crore after September 2021. This included the recovery from sale of IFIN NPAs, recoveries from non-group investments, and release of non-fund-based limits.

Banks have classified loans to IFIN as fraud. The Serious Fraud Investigation Office (SFIO) had observed shortcomings in the operations, risk management and compliance of the company for years.



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IL&FS and ITNL looking to replace auditor SRBC & Co, BFSI News, ET BFSI

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Infrastructure Leasing & Financial Services (IL&FS) and subsidiary IL&FS Transportation Networks Ltd (ITNL) are evaluating replacement of auditor SRBC & Co, an EY affiliate, as their statutory auditor, after a damning audit quality review report by the National Financial Reporting Authority.

The 343-page report released on Thursday said SRBC did not raise red flags in critical areas like going concern, evaluation of ITNL’s investments and loans.

Responding to ET’s query, IL&FS said discussions were ongoing around the continuation or otherwise of the auditor, and that the audit committee would soon take a call.

“So far neither IL&FS/ITNL has asked SRBC to resign, nor has SRBC offered to resign. This is under examination and is being referred to the audit committee of ITNL for appropriate recommendation to the board of ITNL,” IL&FS spokesperson Sharad Goel said.

EY did not respond till Sunday press time to an email seeking comment, sent on Friday evening.

The National Financial Reporting Authority (NFRA), part of the Ministry of Corporate Affairs, has gone into detail how the auditor did not interpret some of the accounting entries as they ought to be.

This would mean that the financial statements prepared by ITNL and approved by the auditor did not represent the real picture.

This development comes at a time when IL&FS’ government-appointed board is trying to sell ITNL’s assets.



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FinMin extends Uday Kotak’s term as IL&FS Chairman by six months

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The Finance Ministry has now paved the way for Uday Kotak, Managing Director & CEO of Kotak Mahindra Bank to remain chairman of the Board of Infrastructure Leasing and Financial Services Ltd (IL&FS) for six more months.

The Department of financial services (DFS) in the Finance Ministry has now extended by six months (from October 3, 2021 to April 2 next year) the existing exemption accorded to Kotak Mahindra Bank regarding its MD& CEO Kotak serving as a non-executive director in IL&FS. This finance ministry move comes on the recommendation of the Reserve Bank of India.

This is the fifth time such an extension is being given to Kotak Mahindra Bank under the Banking Regulation Act 1949.

It may be recalled that the RBI had, on December 14, 2020, approved a three-year tenure extension to Kotak as CEO of Kotak Mahindra Bank till December 31, 2023.

Exemptions to norm

The Banking Regulation Act 1949 prohibits a bank from being managed by a person who is a director of any other company (other than a subsidiary of a banking company or a non-profit company registered under Companies Act 1956). It, however, allows the central government to provide exemptions to this norm for a specified period based on the recommendation of the RBI.

The government had in 2018 appointed Kotak to the Board of IL&FS to help the crisis-ridden IL&FS, which had seen a blowout, come out of its mess.

The finance ministry had first granted a three-month extension under the Banking Regulation Act, followed by nine months extension and two more extensions of one year each. Kotak’s term as Chairman of the Board of IL&FS was due to end on October 2 this year.

Complex web

The Kotak-led Board at IL&FS had discovered a complex web of over 250 companies forming part of the IL&FS group, which had an outstanding of over ₹ 94,000 crore to lenders.

On Tuesday, in the context of the Evergrande development– which roiled the global capital markets– Kotak had tweeted that the Indian government had acted swiftly on the IL&FS matter and that the Government-appointed board estimates 61 per cent recovery at IL& FS.

Kotak’s tweet on the Evergrande development said, “Evergrande seems like China’s Lehman moment. Reminds us of IL&FS. Indian government acted swiftly. Provided calm to financial markets. The Government appointed Board estimates 61 per cent recovery at IL&FS. Evergrande bonds in China trading ~25 cents to a dollar”.

Meanwhile, commenting on Kotak’s extension as Non-Executive Chairman of IL&FS, C S Rajan, Managing Director, IL&FS, said, “IL&FS is privileged to enjoy the continued leadership of Kotak for another six months. I am confident that under his guidance the IL& FS would accomplish the resolution targets set”.

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Govt extends Uday Kotak’s term as IL&FS chairman by 6 months, BFSI News, ET BFSI

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NEW DELHI: The government on Wednesday extended the term of Uday Kotak as non-executive chairman of debt-ridden IL&FS group by another six months.

The government through a gazette notification extended the term of Kotak, who is also the managing director and chief executive officer of Kotak Mahindra Bank, till April 2, 2022.

The notification was issued by the department of financial services in the ministry of finance dated September 21, 2021.

Last year, the government had extended his term by 12 months till October 2, 2021. The extended six-month term will commence from October 3, 2021.

Under the Banking Regulation Act, 1949, a bank cannot be managed by any person who is a director of any other company. He or she can be given a temporary exception for three months or nine months with the concurrence of the RBI.

The statutes will “not apply to Kotak Mahindra Bank in so far as it relates to its managing director and chief executive officer Uday Kotak being on Board of Infrastructure Leasing and Financial Services Limited as its non-executive director for a further period up to the 2nd day of April, 2022,” the notification said.

Kotak was appointed by the government as the head of the lender’s board in 2018 to help the troubled company come out of difficulties, after the state took over the board.

The Uday Kotak-led board has discovered that there was a complex web of over 250 companies which were part of the overall IL&FS group that has an outstanding of over Rs 94,000 crore to lenders. Over 90 per cent of the flagship company’s assets are classified as dud.

The board is trying to keep the company as a going concern by focusing on asset sales and has appointed a resolution professional to steer the way.



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IL&FS recoveries may top 61%, lift sagging IBC average in 2021, BFSI News, ET BFSI

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Amid the near liquidation value recovery of Videocon and Siva Industries assets, IL&FS resolution may bring some cheer for the lenders.

At the group level, it is likely to recover 61% against the average 39% for IBC overall. The average IBC recoveries for the last fiscal had dropped to a quarter.

IL&FS is likely to recover Rs 61,000 crore assets from the group debt of Rs 99,000 crore as of October 2018, an increase of 5,000 crore over the earlier estimate.

“Between now and September 2021, we see this (Rs 43,000 crore of addressed debt) number going up in excess of Rs 50,000 crore. Thereafter, we are increasing our overall estimate of what we think we can resolve to Rs 61,000 crore, or close to 62 per cent, of the total debt,” Kotak said. The upgrade in potentially addressable debt by Rs 5,000 crore (to Rs 61,000 crore) has been largely on account of improved valuations, better operating performance and enhanced recoveries from non-group exposures, the Group had said in September. This includes the debt addressed through resolution, restructuring and liquidation across 347 IL&FS companies.

According to the quarterly newsletter of the Insolvency and Bankruptcy Board of India for March 2021, the recovery through resolution amounted to about 39% and through liquidation around 4%. According to bankers, recovery in the IBC process has had extreme outcomes.

The IL&FS playbook

As of end-March 2021, of the 347 entities, 186 have been resolved with Rs 43,000 crore of debt addressed.

The 347 companies in the group have been reduced to 167 and are expected to drop further to below 100 by the end of the year. This was done by shutting down or selling off a large number of foreign and local subsidiaries.

In the case of road projects, where conventional investors were spoilt for choice given the road projects on

sale, the board decided to go for the alternative option of setting up an infrastructure investment trust (InvIT).

While the new board has addressed a major chunk of the debt, the challenge is resolving IL&FS Financial Services and the remaining cases of dozens of companies where the amounts involved are relatively small. In the case of I-FIN, the board is understood to have dropped the plan to sell Rs 5,000 crore worth of loans after bids came in the range of 5%.



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FlexiLoans.com partners Vivriti Capital to disburse loans worth ₹300-cr to MSMEs

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Fintech platform FlexiLoans.com has partnered with Vivriti Capital to provide working capital financing of over ₹300 crore to Micro, Small and Medium Enterprises (MSMEs) across the country.

MSMEs can apply for loans online and receive in-principal approval within 24-48 hours digitally without manual intervention.

The partnership will be powered by FlexiLoans.com’s technology and credit underwriting platform ‘BiFrost’, which has been integrated with Vivriti’s Co-lending platform ‘CredAvenue’The partnership is aimed at reaching out to more 10,000 MSMEs in the next 12-18 months, the company said in a statement.

Deepak Jain, Co-Founder, FlexiLoans.com said, “FlexiLoans has been scaling its co-lending platform since the IL&FS crisis a couple of years ago to service the wide range of ecosystem and boost assets under management growth. Vivriti has been our long-standing lending partner and its digital-first approach, deep lending expertise syncing perfectly with our co-lending ideology”.

Gaurav Kumar, Co-Founder, Vivriti Capital and CEO CredAvenue said, “The partnership is built on the combination of a deep technology integration via APIs and substantial capital base. We expect to unlock immense market potential and scale with it in the near future. CredAvenue’s co-lending platform has been specifically designed to enable scale-up of such partnerships for Banks, NBFCs and Fintech players vis automated discovery, underwriting, operations and reporting modules on one single portal”.

Since its inception in 2016, Flexiloans.com has disbursed more than ₹1,000 crore to over 30,000 customers across 1,500 cities in India. It receives over 1 lakh applications per month, largely from Tier-II, III and Tier IV cities.

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Market share of banks in individual housing loans up: NHB report

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The market share of banks in individual housing loans has gone up from 62 per cent in 2017-18 to 67 per cent in 2019-20, while that of housing finance companies (HFCs) has come down from 38 per cent to 33 per cent.

According to the National Housing Bank’s latest Trend and Progress of Housing in India report, the pace of growth of banks remained higher than that of HFCs, partly supported by portfolio buyouts, leading to increase in their market share in individual loans.

In 2018-19, the market share of banks and HFCs in individual housing loans (IHLs) was at 64 per cent and 36 per cent, respectively. The overall growth in IHLs of banks and HFCs combined stood at 10 per cent in 2019-20 compared to 16 per cent in 2018-19.

The report said: “The real estate and Housing Finance Sector in India began to witness a moderation in growth after the IL&FS crisis in September 2018. However, with proactive measures and various other initiatives of the Government, RBI and NHB, the sector started to gain momentum.”

The total outstanding IHLs of HFCs and banks combined was around ₹20-lakh crore as at the end of March 2019-20 compared to around ₹18-lakh crore in 2018-19.

Outstanding IHLs of Banks and HFCs registered year-on-year growth of 8.5 per cent and 3 per cent, respectively, NHB said.

Slab-wise analysis

Slab-wise analysis of total IHLs of scheduled commercial banks (SCBs) and HFCs combined shows that around 44 per cent of the total IHL as on March 31, 2020 (against 47 per cent as on March 31, 2019) was towards 124 lakh housing units (119 lakh as on March 31, 2019) within IHL slab of ₹25 lakh.

Fifty six per cent of the total IHL (53 per cent as on March 31, 2019) was towards 30 lakh housing units in the IHL slab of over ₹25 lakh, the report said.

Referring to growth in the number of housing units financed within IHL slab of ₹25 lakh, NBH observed that affordable housing continues to grow on account of robust demand and various support measures towards this segment.

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IL&FS: Aggregate debt recovery target hiked to ₹61,000 crore

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About ₹43,000 crore of debt of bankrupt Infrastructure Leasing and Financial Services (IL&FS) has been addressed and the new board and management expects that this would increase to ₹50,000 crore by end of September this year.

“The group has also enhanced its estimates of aggregate debt recovery to ₹61,000 crore – an increase of ₹5,000 crore over its earlier estimate of ₹56,000 crore,” said Uday Kotak, Chairman of the board of IL&FS on Thursday.

The increased estimate represents resolution of nearly 62 per cent of overall fund based and non-fund based Group debt of about ₹99,000 crore, as of October 2018.

“The aggregate debt of ₹43,000 crore addressed till date represents nearly 71 per cent of the overall revised targeted recovery value of ₹61,000 crore and 44 per cent of the overall debt of over ₹99,000 crore (as of October 2018),” said a statement by IL&FS, adding that the recovery target is higher than the average recovery observed under IBC since its inception.

“The upgrade in potentially addressable debt by ₹5,000 crore (to ₹61,000 crore) has been largely on account of improved valuations, better operating performance and enhanced recoveries from non-group exposures,” it further said.

Of the total 347 entities under IL&FS Group (as of October 2018), a total of 186 entities stand resolved till date, while the remaining 161 entities are under various stages of resolution.

CS Rajan, MD, IL&FS, said that by September end, the number of entities would come down to double digits. This would be done by a combination of liquidation, closure of some entities and sale of some entities.

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IL&FS sells environment business; to pare Rs 1,200 crore of debt

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IL$FS file photo

Debt-laden Infrastructure Leasing and Financial Services (IL&FS) on Wednesday said it has sold its entire stake in IL&FS Environmental Infrastructure & Services (IEISL) and its subsidiaries to EverEnviro Resource Management Private (EverEnviro). This sale will reduce IL&FS’s overall debt by Rs 1,200 crore, which is the combined debt of entities under the group’s environment businesses, a release said.

IL&FS, as the promoter shareholder of IEISL, held 97.54 per cent of equity shares of IEISL. The balance 2.46 per cent was held by IL&FS Employee Welfare Trust. The entire shareholding in IEISL, held by IL&FS Group, has been transferred to EverEnviro, which is a 100 per cent owned subsidiary of the Green Growth Equity Fund (GGEF), managed by EverSource Capital, the release said.

IEISL subsidiaries – Dakshin Dilli Swachh Initiative (DDSIL), Swayam Swachatta Initiative (SSIL), RDF Power Projects (RDF), East Delhi Waste Processing Company (EDWPCL) and Kanak Resources Management (KRML) form part of this transaction and have also been transferred to EverEnviro, it said.

The group said as part of the transaction, around 4,000 employees, including consultants, have been transferred along with the businesses, which would effectively result into an annual savings of close to Rs 50 crore to it. IEISL is a waste management company with presence across various segments including construction and demolition, collection and transportation and waste to energy. It currently manages over 8,400 tonnes per day (TPD) waste.

EverSource Capital manages GGEF, established with anchor investment from India’s National Investment and Infrastructure Fund (NIIF) and the Department for International Development (DFID), Government of UK

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IL&FS tackles recovery of ₹32,000-crore debt

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The new board of IL&FS has addressed stressed debt worth ₹32,000 crore as of December quarter and retained the aggregate recoverable debt at over ₹56,000 crore by FY22,

The Group maintains its estimates of addressing out of an overall debt of over ₹99,000 crore (as of October 2018).

The aggregate debt of ₹32,000 crore comprises about ₹21,600 crore of debt addressed basis cash balances and ₹10,300 crore of additional net recovery expected from resolution and restructuring applications filed with the NCLT, Mumbai and NCLAT, the approvals for which are awaited.

Also read: IL&FS money-laundering case: Enforcement Directorate attaches assets worth ₹452 crore of British national

The aggregate debt represents nearly 57 per cent of the overall targeted recovery value of about ₹56,300 crore and nearly 32 per cent of the overall debt of over ₹ 99,000 crore.

The debt addressed basis cash balances increased by about ₹2,500 crore since September 30, 2020 on receipt of ₹780 crore towards settlement by IL&FS Solar Power, tariff payments from the Discom by IL&FS Tamil Nadu Power of about ₹1,190 crore and ₹300 crore recovered in IL&FS Financial Services from borrowers outside the IL&FS group.

Also read: PFS clears resolution plan of IL&FS Tamil Nadu Power Co

The Resolution and Restructuring applications (for resolution of over ₹14,000 crore) that have been filed with NCLT and NCLAT for final approvals, including ₹7,550 crore for three road assets, ₹4,900 crore for restructuring of ITPCL, ₹1,370 crore towards settlement to be received by Kiratpur Ner Chowk Expressway and Fagne Songarh Expressway pursuant to termination of concession agreements and ₹ 200 crore for environment and real estate entities.

However, the Group faced some delays in moving ahead on the resolution mainly due to impact of Covid. This has also been compounded by delay in receipt of annuities and attrition of key managerial and operational personnel, it said.

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