DNA Money Edit: Salvaging the sinking IL&FS

Monday saw a proactive government move swiftly to save the sinking ship called Infrastructure Leasing & Financial Services (IL&FS). The intense developments that unfolded within the span of a hectic day surely highlighted the government's growing concern about IL&FS's defaults.

The new Board has taken charge, and it has been asked to come up with a resolution plan and monetisation of its assets at a later stage. The Board will have to ensure the infusion of fresh funds into the company to make sure the debt-ridden company doesn't default any further. It is likely to be empowered to change the Boards of IL&FS subsidiaries as well.

The debt pile-up and the subsequent defaults by IL&FS deserve to be investigated thoroughly. The Serious Fraud Investigation Office has initiated a probe. It has come to light that over the last few years, the management painted a rosy picture of the company and paid dividends in an effort to camouflage the slipping financials.

All is not lost at the beleaguered IL&FS but it has triggered a political slugfest. The stock market, however, seems be heaving a sigh of relief as it pins hopes on the new Board. Lenders and shareholders believe that the new Board will come up with a roadmap that will take the company out of the abyss. It may take a while to complete the process, though.