Mumbai: The newly constituted board of Infrastructure Leasing & Financial Services (IL&FS) has ordered reduction of operating and non-essential expenses of the financially struggling company, and formed a committee under vice chairman Vineet Nayyar to chart a road map to resolve its troubles.
The Uday Kotak-led board also felt that the entire group would have to do a fresh audit of accounts, IL&FS said in a statement.
The seven-member board was set up after the Ministry of Corporate Affairs on October 1 moved the National Company Law Tribunal to sack the company’s then management, like what the government did with the fraud-hit Satyam Computer Services in 2009. The new board held its second meeting on Friday and deliberated on the road ahead for the company.
“Pursuant to the recommendations of the audit committee, the board required a full audit of the standalone and consolidated accounts as on September 30, 2018,” the company said. “The board also initiated several austerity measures related to personnel and operating expenses.”
The company has started replacing its nominee directors at various subsidiaries. It has for now nominated directors from among the current board, based on a recommendation of its nominations & remuneration committee.
Nayyar, Nand Kishore and Malini Shankar are appointed directors at IL&FS Financial Services, while Nayyar and CS Rajan will sit on the board of IL&FS Transportation Networks; Nand Kishore on IL&FS Environmental Infrastructure & Services and GC Chaturvedi and Nayyar on IL&FS Energy Development. Nayyar is also on the board of IL&FS Education & Technology Services, Nand Kishore on IL&FS Technologies and Malini Shankar on the board of Tamil Nadu Water Investment Company.
In the first meeting, the new board was told about the more than 300 subsidiaries and associates of the group. It then decided to meet frequently and come up with a plan to resolve the debt issues facing the group.
While the NCLT is scheduled to hear the IL&FS case on October 31, the Serious Fraud Investigation Office has initiated an investigation into allegations that the erstwhile top management at IL&FS had committed blunders and mismanaged the firm. It has to submit a report in three months.
IL&FS, one of the biggest financial services firms lending for roads and ports with a debt of Rs 91,000 crore, shook the financial markets when it defaulted on its loans repayments. Rating companies, which had rated all its bonds AAA, immediately downgraded those to the default D category.
The government blamed the company management for the mess, saying it was blind to the pressures building on the system as many of its projects were incomplete and saw cost escalation.
Source: Economic Times