Key shareholders of cash-strapped Infrastructure Leasing & Financial Services Ltd may press for cost-cutting measures as a condition for infusing capital to revive IL&FS.
‘These riders include closure of some of its 50 overseas step-down subsidiaries and a cap on remuneration of key managerial personnel.
At the emergency meeting of the IL&FS board on Saturday, there was no decision on raising additional funds.
Sources said IL&FS has been asked to prepare a strategy on how it will monetise and divest its assets for raising funds in the medium to short term.
Any decision on fund-raising will be taken after the AGM later this month (or within 15 days). In the interim, the company’s new Chairman, SB Mathur, will have time to familiarise himself with the company and get a better understanding of its problems. Mathur took charge after LIC Managing Director Hemant Bhargava stepped down as the Chairman of IL&FS .
Industry sources say shareholders are likely to take a hard look at IL&FS’ direct foreign subsidiary, IL&FS Global Pte Limited (Singapore), and its four wholly-owned subsidiaries based in Singapore, London, Dubai and Hong Kong. Further, the need for indirect (or step-down) subsidiaries in countries such as Spain, Portugal, Brazil, Mexico, Colombia, Albania, Singapore, Hong Kong, the Philippines, the UAE, Mauritius and Seychelles, will be weighed. In the backdrop of the liquidity crisis facing the IL&FS group and the need to divest assets and cut costs, shareholders are likely to move to cap the remuneration of top management, according to sources.
As per IL&FS’ annual report for FY2018, the remuneration of the top three key managerial personnel aggregated to ₹49.81 crore. Even as it has put a portfolio of 25 projects on sale, there are reports that IL&FS’ headquarters at Bandra Kurla Complex is on the block.
Sources say IL&FS Township & Urban Assets Ltd (ITUAL) may look to divest its stake in Gujarat International Finance Tec-City (GIFT City). As a co-developer and anchor investor of GIFT Project, ITUAL has completed development of two 30-storey commercial buildings, with an aggregate built-up area of 1.6 million square feet at an estimated investment of ₹1,000 crore.
The top management of IL&FS, in a recent communication to employees, underscored that around ₹16,000 crore of its liquidity is stuck in claims and termination payments.
While late last month the board approved a rights issue of 30-crore equity shares at ₹150 per share aggregating to ₹4,500 crore to shore up its capital and specific asset divestment plan to reduce its overall debt by ₹30,000 crore, people close to the developments at IL&FS say cost-reduction efforts at group companies will be vigorously pursued by the shareholders.
(With inputs from Surabhi)