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The National Company Law Tribunal (NCLT) has approved the takeover of the crisis-hit IL&FS management board by the government. The corporate affairs ministry has applied to the tribunal on Monday, i.e. 01/10/2018. IL&FS, where LIC is the largest shareholder with a 25.34 per cent stake, has a debt burden of over Rs 90,000 crore.
The Debt defaults by certain diversified entities of the IL&FS group have triggered fears of a liquidity crisis in the financial markets and the RBI has been taking steps to improve the overall cash situation.
The new six-member board created under the Article 241 of the Companies Act, is led by veteran banker Uday Kotak, who will take charge of the company. The other members are former SEBI chief GN Vajpai, ICICI Bank chairman GC Chaturvedi, Tech Mahindra’s Vineet Nayyar, and former bureaucrats Malini Shankar and Nand Kishore.
According to a government press release, the government found that the consolidated financial statement of the IL&FS holding company and its subsidiaries exaggerated the value of their non-current assets by showing intangible assets worth over Rs. 20,000 crores.
The release also stated that the company had negative cash flows from its operations, its net outflow being Rs. 7,020 crores in FY 18. IL&FS also saw a sharp increase in bank deposits held in the lien, which surged by Rs. 1,681.59 crores in FY 18.
