Government appointed board of cash strapped IL&FS on Wednesday said the gross non-performing loan of its lending arm IL&FS Financial Services (IFIN) has touched unprecedented level of 90 percent in the December, 2018 quarter.
The board led by veteran banker Uday Kotak said that IFIN had reported a gross NPA of 61.8 percent and 5.3 percent in the quarter ended September 2018 and March 2018, respectively. “The company which reported a GNPA of 5 percent in March 2018. I have heard double digits NPAs but 90 percent GNPAs is very unusual by any standards. That’s the challenge that we have faced,” Kotak, who is the chairman told reporters.
In 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 to March 2019 stood at Rs 931 crore. IFIN’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 actions on external lending portfolio of IFIN.
The board Wednesday appointed Vineet Nayyar, who was 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 net worth of the company,” Kotak said.
The company’s fund based outstanding debt was Rs 94,216 crore as of October 8, 2018. IL&FS chief operating officer N Sivaraman said besides the large outstanding debt, the other challenges faced by the company includes high debt to equity ratio of 10:1, huge asset-liability mismatch and poor recovery of loans.
He said total IL&FS Group companies stands at 302 after adjusting for closure of 45 entities. The company said it has already launched asset monetisation process in 55 group businesses including securities business, renewable energy, domestic road vertical, alternate investment fund management, education and thermal.
It is in discussion to launch asset monetisation process for OTPC, Paradip Refinery Water, ILFS Tech, LARES Philippines, ILFS Envt and Mangalore SEZ, among others.
Kotak further said the position of the new board is to see how it recovers money for the interest 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 not go to the shareholders but to the creditors sitting on the other side. There is a good discussion that is happening and we are expecting a fairly reasonably faster and fair outcome of this,” Kotak said.