The lender has also taken cost-cutting measures such as reduced wage bills and other operating costs
The newly constituted Board of Infrastructure Leasing & Financial Services (IL&FS) Ltd is in the process of evaluating and initiating divestment of four more subsidiaries in the coming weeks. Meanwhile, the crisis-hit lender has already reduced wage bills and other operating costs.
Banker Uday Kotak-led Board on Monday submitted its 'Second Report on Progress & Way Forward' on the IL&FS group with the National Company Law Tribunal's (NCLT) Mumbai Bench. According to the report, the process is underway to come out with bids for divesting stake in IL&FS Education, IL&FS Technologies, ONGC Tripura Power Company and IL&FS Paradip Refinery Water Ltd. The Expressions of Interest (EoI) for the same are likely to be floated in the next few weeks.
On the cost rationalisation measures undertaken, the report states, "The new Board has assessed and undertaken various steps to reduce the wage bill of the IL&FS Group which are expected to result in savings across various entities within the group."
The cost-cutting measures include salary rationalisation of the employees, separation of superannuated consultants, discontinuation of business and verticals, talent restructuring, amalgamation of roles and responsibilities, group companies being identified for closure, among other things.
"The new Board will be taking up the aforesaid manpower optimisation initiatives across the IL&FS Group in two phases. Phase I will contemplate initiatives like salary rationalisation of employees, separation of superannuated consultants which have been executed. The said steps are likely to yield net savings of approximately Rs 1,000 million (Rs 100 crore) annually," mentions the report filed with NCLT."
Phase-II initiatives include talent restructuring, amalgamation of roles and responsibilities, which are under process. These steps will yield an approximately 50% savings in the wage bill of the IL&FS Group, the report said.
Several other steps are being initiated and that will bring down total manpower of the IL&FS Group by approximately 65% and wage cost by 50%.
Operating costs have also been reduced by way of terminating "non-essential real estate" contracts. This has helped in some savings. Simultaneously, evaluation of other proposals of sale of non-core assets to raise immediate liquidity are also being looked at.
Since October 31, leases of various guest houses have been terminated and annual lease amount of Rs 5.6 crore will be saved. Due to the termination of the leases, security deposit refunds of Rs 1.7 crore, too, have been received by different IL&FS Group entities.
"Closure of offices at various locations and cost reduction on facility management and administration related costs is expected to yield in savings aggregating to Rs 49 million (Rs 4.9 crore) annually," reads the report.
There shadow lender also plans on "Generating revenue by leasing out office premises in the IL&FS Financial Services Centre to other companies, to the tune of approximately Rs 135 million (Rs 13.5 crore) per annum and security deposit aggregating approximately Rs 67 million (Rs 6.7 crore), likely to commence from February 2019".
Sale of high-end cars owned by the company, non-core assets and office premises are also among liquidity-generating measures being looked at by ILFS.
But despite all these measures undertaken, there still is operational cash gap and would remain till the end of the ongoing fiscal.
Some of the key entities which will face the cash gaps are IL&FS Ltd, IL&FS Transportation Networks Ltd, Elsamex (India), several subsidiaries of ITNL, IL&FS Energy Development Company Ltd and some of its subsidiaries, IL&FS Engineering & Construction Company Ltd, IL&FS Environmental Infrastructure & Services Ltd Holding company and several of its subsidiaries, IL&FS Skill Development Corporation Ltd, IL&FS Technologies Ltd Holding Company, IL&FS Township & Urban Assets Ltd; IL&FS Maritime Infrastructure Company Ltd Holding company, etc.
TROUBLED TIMES
- The lender has also taken cost-cutting measures such as reduced wage bills and other operating costs
- But despite these measures, operational cash gap will remain till March 2019
Rs 100 cr – IL&FS will save via salary rationalisation of employees, separation of superannuated consultants
65% – Reduction in manpower IL&FS group will have
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