The board, led by veteran banker Uday Kotak, said that IFIN reported gross NPAs of 61.8 percent and 5.3 percent in the quarters ended September 2018 and March 2018, respectively.
The government appointed a board of cash-strapped IL&FS on Wednesday said the lending arm’s gross non-performing loan (IFIN) reached an unprecedented 90 percent in the December 2018 quarter.
The board, led by veteran banker Uday Kotak, said that IFIN reported gross NPAs of 61.8 percent and 5.3 percent in the quarters that ended September 2018 and March 2018, respectively. “The company reported a GNPA of 5 percent in March 2018. I have heard double-digit NPAs, but 90 percent of GNPAs are very unusual by any standards. That’s the challenge we have faced,” Kotak, the chairman, told reporters.
In the recent past, the highest NPA reported in the banking sector was around 27.9 percent by IDBI Bank. He said the total recovery for IFIN between October 2018 and March 2019 stood at Rs 931 crore. IFC’s lending to external entities stood at Rs 10,656 crore as of March 31, 2019, while to the IL&FS group was Rs 6,849 crore.
The company said there is an active recovery action on IFIN’s external lending portfolio.
On Wednesday, the board appointed Vineet Nayyar, executive chairman and managing director, as executive chairman. It also redesignated CS Rajan as the managing director of IL&FS. Kotak said the net worth of IL&FS Group was Rs 9,000 crore as of March 2018. “It is reasonable to assume that there is significant erosion to the company’s net worth,” Kotak said.
As of October 8, 2018, the company’s fund-based outstanding debt was Rs 94,216 crore. IL&FS chief operating officer N Sivaraman said that besides the large outstanding debt, the company’s other challenges include a high debt-to-equity ratio of 10:1, a huge asset-liability mismatch, and poor loan recovery.
He said the total number of IL&FS Group companies stands at 302 after adjusting for the closure of 45 entities. The company said it has already launched an asset monetization process in 55 group businesses, including securities, renewable energy, domestic road vertical, alternative investment fund management, education, and thermal.
The launch of a set monetization process for OTPC, Paradip Refinery Water, ILFS Tech, LARES Philippines, ILFS Envt, and Mangalore SEZ is in the discussion.
Kotak further said the new board’s position is to see how it recovers money for the interests of the stakeholders, including the creditors. “I think we will be able to achieve this (resolution process) in an accelerated manner in an environment of comfort with each other’s trust. We are not trying to hoodwink anybody.
“We also know that whatever comes will go not to the shareholders but to the creditors on the other side. A good discussion happening, and we expect a fairly reasonably faster and fairer outcome,” Kotak said.
