New Board to meet before October 15, apprises government about its assessment of the company
The newly-appointed Board of the beleaguered Infrastructure Leasing and Financial Services (IL&FS) is soon likely to appoint an independent professional agency to get a clear picture of the company's real situation, sources said.
The Board is scheduled to meet for the second time next week before October 15. On Wednesday, Board chairman Uday Kotak and members Vineet Nayyar and CS Rajan met Union corporate affairs secretary (MCA) Injeti Srinivas in Delhi to give him a first-hand assessment of the firm's current position. The first Board meeting was held in Mumbai on October 4, three days after the new Board was appointed by the government, replacing the old one following a National Company Law Tribunal's order.
"We are consulting the government and making progress," Kotak said after meeting the secretary.
"The Board is looking at hiring independent specialised professionals to do due diligence and fact-finding for them," the source said.
The government feels that further efforts are required to get a clear picture of the real situation of IL&FS.
So far, only a partial picture has emerged.
Sources also pointed out at the possibility of fraud cannot be ruled out.
The government has so far maintained it to be a case of mismanagement and misrepresentation of facts. The Serious Fraud and Investigation Office, which is probing the firm and its group companies, is likely to give its report in a month.
The debt-stricken firm has been found to have equity in several other companies, including some offshore entities, which led to a jump in the number of subsidiaries of IL&FS, sources said.
While the government had put the number of group companies of IL&FS at 169, Kotak said there were 348 subsidiaries.
Sources said that the debt-laden company will need around Rs 100 crore a month to stay afloat. It has, however, not made any demand for funds from the government.
"We need to fulfil the working capital requirement, contractual and repayment obligations for the company to stay afloat," said the official, adding that Rs 100 crore is needed apart from repayment obligations.
The Board will also look at cutting unnecessary expenditure which may also involve layoffs. "It will have to take tough decisions," the source said.
The Board has already reached out to National Highways Authority of India for settlement of claims and disputes. The company needs a temporary relief as far as repayment obligations are concerned.
Meanwhile, IL&FS Board has received the court's permission to induct new directors in the firm's subsidiaries and Joint Ventures (JVs). Besides giving it more authority, the new Board has also been ring fenced against possible litigations, as "it will be taking important decisions which may lead to court cases," sources said.
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