IL&FS deals with debt resolution of 43,000 to date, reduces entities to 161

MUMBAI: a hard-pressed infrastructure financier IL&FS said on Thursday that it had dealt with the global debt of the group of ??43,000 crore to date from asset sales and other cash receivables.

As part of its quarterly update on the progress of the ongoing Group resolution process, the ILFS said Thursday it has also increased the debt collection target to ??61,000 crores.

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“The Group has further improved its estimates of overall debt recovery ??61,000 crore — an increase of ??5,000 crore from its previous estimate of ??56,000 crores. The increased estimate represents the resolution of nearly 62% of the Group’s overall debt, both founded and unfounded, on funds of approx. ??99,000 crore, as of October 2018, “the company said in a statement.

The overall debt of ??43,000 crore processed to date represents almost 71% of the overall revised target salvage value of ??61,000 crore and 44% of global debt over ??99,000 crore (as of October 2018).

“It can be borne in mind that the recovery target is higher than the average recovery observed under IBC since its inception,” added the company.

Of the 347 entities that IL & FS had under the IL&FS group (as of October 2018), 186 entities are resolved to date, while the remaining 161 entities are in various stages of resolution.

IL&FS, which started out as a road construction finance company, has expanded its scope to around 347 subsidiaries, accumulating debt of around ??91,000 crore in the process. In August 2018, when the company was unable to repay obligations owed to investors, it collapsed.

In October 2018, the government set up a panel under the leadership of banker Uday Kotak to set up the resolution process in the conglomerate.

“The new board of directors has been able to maximize collections for all categories of creditors, following a three-pronged strategy of resolution, restructuring and collection, while keeping in mind the principles of corporate governance. ‘business and corporate finance,’ the company said.

The rise of potentially addressable debt by ??5,000 crore (at ??61,000 crore) is largely due to improved valuations, better operational performance and increased recoveries from non-group exposures.

All of the addressed debt of ??43,000 crore includes ??26,800 crore of entity monetization initiatives completed and accumulated cash balance, ??14,350 crore of additional net recovery expected from resolution and restructuring requests filed with NCLT (Mumbai) and NCLAT and pending approval, and ??1,926 crore of the Supreme Court verdict adopted in favor of Rapid Metro Gurgaon.

The company has since January finalized the sale of Chongqing Yuhe Expressway, the sale of environmental enterprises; receiving claims from NHAI for three road projects (Kiratpur Ner Chowk, Fagne Songadh and Chenani Nashri Tunnel); receipt of the product under the IBC resolution of the Port of Dighi; operating income received from operating road concessions and from the sale of electricity to ITPCL.

Over the next few quarters, he believes he will take care of about. ??8,000 crore of additional debt by September 2021, which would include: monetization of the stake in ONGC Tripura, Warora Chandrapur and Karyavattom Stadium; the second phase of InvIT comprising five special road vehicles; and receipt of expected claims from road authorities for the Khed Sinnar Expressway and Srinagar Sonmarg Tunnel.

Thus, the overall debt processed should exceed ??51,000 crore by September 2021. In addition, the recovery of about ??10,000 crore is likely to spill beyond September 2021 for a variety of reasons, including procedural complexities, he said.

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