IL&FS currently has a debt of around ₹91,000 crore. Photo: Mint
Mumbai: The newly-appointed board of directors of debt-stricken Infrastructure Leasing and Financial Services (IL&FS) called for a full audit of the company’s accounts as of 30 September at a meeting on Friday.
The company will also implement cost-cutting measures, according to a press statement by the board after the meeting—its second so far.
The statement did not give any indication of how the company will manage its ongoing liquidity crisis, though the series of defaults by the parent and its subsidiaries continues with the group missing another payment last Monday.
However, the board of the parent company approved the formation of a core operating committee under vice-chairman and managing director Vineet Nayyar.
The board also initiated several austerity measures related to personnel and operating expenses, according to the statement.
“As the first step of the austerity measures, IL&FS is likely to reduce the remuneration of the top management and stop certain dividend payments to save on costs,” said a person familiar with the development, following Friday’s meeting.
“Though the remunerations of most of the top management employees are somewhat in line with the average ratio of the salary expenses to the company’s topline in the infrastructure sector, considering the current crisis, employee benefits have to be controlled until the situation improves. Dividend payouts have been an important element for rewarding shareholders of the group and its subsidiaries over the years. But these plans have to be now revised to control costs,” said the person mentioned above.
The board replaced the nominee directors on eight subsidiaries of IL&FS, based on the recommendations of the nominations and remuneration committee. The new nominee directors of the board of IL&FS Financial Services are Nayyar, Nand Kishore and Malini Shankar. For IL&FS Transportation Networks, they are Nayyar and C.S. Rajan. For IL&FS Energy Development they are G.C. Chaturvedi and Nayyar, while it is Shankar for Tamil Nadu Water Investment Co Ltd.