2. Introduction about the company
IL&FS (Infrastructure leasing & Financial service ltd) is an Indian
infrastructure development and financial company.
It operates through more than 250 subsidiaries including IL&FS
investment managers, IL&FS financial services and IL&FS
Transportation networks India Limited(ITNL).
It was formed in 1987 as an “RBI registered core investment
company” by 3 Financial Institutions to provide finance and loans for
major Infrastructure Projects.
1.Central bank of India(CBI)
2.Housing development finance corporation(HDFC)
3.Unit trust of India(UTI)
3. Introduction about the company
IL&FS has 256 group companies as of 2018 including subsidiaries,
joint venture companies and associate entities.
Through on the surface the company appears to have 24 direct
subsidiaries and 141 indirect subsidiaries.
IL&FS has several projects in different sectors including
Transportation, Area development, e-governance, Health Initiatives,
Cluster development, Finance, Power ports, water & waste water
management, Urban Infrastructure, Environment, Education and
Tourism.
4. Big Projects
GIFT CITY (Gujarat International Finance Tech- CITY)
Ladakh to Kashmir Tunnel(Asia’s largest Bi-directional tunnel)
Building oil Terminal(3rd largest petroleum storage & trading centre in
the world)
Jammu - Srinagar highway(India’s longest and safest road tunnel)
Chenani – Nashri Tunnel
5. SHARE HOLDING PATTERN
INSTITUTIONAL SHARE HOLDERS STAKE
LIC 24.34%
ORIX CORPORATION(JAPAN) 23.54%
ABU DHABI INVESTMENT AUTHORITIES 12.56%
HDFC 9.02%
CENTRAL BANK OF INDIA 7.67%
SBI 6.42%
GOVT. OWENED FIRMS 40%
6. HOW DO THEY FUND THEMSELVES
BORROWINGS
LONG TERM
SHORT TERM
7. WHAT WENT WRONG
• Total consolidated Debt – 91000cr.
• In June 2018 IL&FS Transport networks default the payment to bank
for the 1st time.
• IL&FS had problems in paying debt/interest to bank.
• IL&FS defaulted 4000cr. Debt obligation from bank and short term
deposites.
• It also defaulted 450cr. Worth of inter-corporate deposits to SIDBI.
• In 12th sept. 2018 IL&FS has defaulted in payment of interest more
than 7 times so far.
• The D/E ratio was 18(Hyper burden).
8. REASON FOR THE CRISIS
Improper management of company’s resources by top level
management.
Top managements get paid high amount of salary.
It’s a shadow bank, thus it has less regulatory compliance.
Cost escalation due to project delays.
Only 1 meeting of risk analysis of the firm from past 8-9 years.
Problems in land acquisitions for the project.
They were taking short term loans to pay the long term loans.
9. IMPACT OF THE CRISIS
• The market indices Sensex and Nifty fell due to it.
• The default in payments by certain group entities of IL&FS have
triggered fears of liquidity crisis in the financial markets.
• 60% fall in the shares of housing finance companies like DHFL.
• Shares of L&T Finance, Bajaj Finance etc. were down in the range of
14-15%.
• Many corporates, MFs, Insurance company have invested in CPs &
NCDs of the IL&FS group. So default in their payments affects the
overall sector.
10. STEPS TAKEN BY GOVERNMENT
• RBI is reportedly conducting a forensic audit into IL&FS books of
accounts.
• RBI infuse open market operations.
• On 1st oct 2018 Govt. of India took steps to take control of the
company .
• Govt. superseded the existing board of debt laden IL&FS with six new
board members, announcing Kotak Mahindra bank MD & CEO UDAY
KOTAK as chairman of the board.
Editor's Notes
SEPT 2015 RUPEE ECB MASALA BOND(EXPORT DEVELOPMENT OF CANADA) RUPEE DENOMINATED BOND.
MINIMISE THE RISK OF CURRENCY FLUCTUTAION, HEDGING COST BEAR BY LENDER. Bonds, non convertible debentures, cd, cp, mortages, lease,
Small industrial development bank of india. Sucheta dalal journalist.
Vineet Nayyar, GN Bajpai, GC Chaturvedi(ICICI), Malini Shankar, Nand kishor. To restore confidence in the f market. Open bond purchase.