IL&FS Board recast, Kotak tasked to restore financial health
Mumbai/New Delhi, Oct 1 : Under all-round attack over the crisis in the IL&FS, the Central government on Monday superseded the management of the beleaguered company by appointing a six-member Board led by banker Uday Kotak to restore the financial solvency of the debt-stricken conglomerate.
"The NCLT (National Company Law Tribunal) suspended the existing board and directed that the suspended members should not represent the company in any form with immediate effect," an official statement said.
"The NCLT approved the induction of six Directors recommended by the government, in the first instance, consisting of Uday Kotak, MD & CEO of Kotak Mahindra Bank as Non-Executive Chairman and Vineet Nayyar, IAS (Retd.), G.N. Bajpai, former Chairman, SEBI, G.C. Chaturvedi, Non-Executive Chairperson, ICICI Bank, Malini Shankar, IAS and Nand Kishore, IA&AS (Retd.) as Directors," said Ministry of Corporate Affairs in a statement.
"The new Board shall take up its responsibility with immediate effect, after following due procedures."
The development comes after the NCLT Mumbai ordered the supersession of the existing Board on a plea moved by the Ministry of Corporate Affairs (MCA) to prevent any "further mismanagement in order to protect public interest".
In Delhi, Economic Affairs Secretary S.C. Garg said the government in public interest moved NCLT to supersede the management of Infrastructre Leasing & Financial Services (IL&FS) on grounds of mismanagement.
"NCLT has allowed appointment of a new Board comprising people with proven record of managing financial and infrastructure institutions. (It is) not a takeover," Garg said.
Key public sector lenders and undertakings such as LIC and SBI have a 25.34 per cent and 6.42 per cent stake in the firm which has around Rs 91,000 crore in long-term debt.
As per some industry estimates, the company has an urgent liquidity requirement of around Rs 5,000 crore.
The move is reminiscent of an earlier decision in which the Central government appointed a new Board of the IT major Satyam.
Earlier, the government said in a statement that after analysing the emerging situation of the IL&FS Group, it has come to the conclusion that "the governance and management change in IL&FS is very necessary for saving the group from financial collapse, which required an immediate change in the existing Board and management and appointment of a new management".
"Continuance of the present Board had become prejudicial to the interests of the company and its members and this management was affecting public interest because of its adverse impact on financial stability and making capital markets so adversely affected."
Lately, the credit crunch has led a few of the company's subsidiaries to default in servicing some of the inter-corporate deposits.
Subsequent to defaults, rating agency ICRA downgraded the ratings of its short-term and long-term borrowing programmes.
IL&FS crisis has dented equity investors' confidence in the entire NBFC space.
IL&FS Ltd is a core investment company and serves as the holding company of the IL&FS Group, with most business operations domiciled in separate companies which form an ecosystem of expertise across infrastructure, finance and social and environmental services.
Initially promoted by the Central Bank of India, Housing Development Finance Corporation Ltd and the Unit Trust of India, IL&FS was incorporated in 1987.
Over the years, it has inducted institutional shareholders including SBI, LIC, ORIX Corporation of Japan and Abu Dhabi Investment Authority (ADIA).
As on March 31, 2018, LIC and ORIX Corporation are the largest shareholders in IL&FS with their stakeholding at 25.34 per cent and 23.54 per cent, respectively. Other prominent shareholders include ADIA (12.56 per cent), HDFC (9.02 per cent), CBI (7.67 per cent) and SBI (6.42 per cent).
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NATO, others turn down US call for help in Hormuz: Trump
Washington (PTI): President Donald Trump on Tuesday said NATO and most of US' other allies have rejected his calls to help secure the Strait of Hormuz as the war with Iran entered the third week.
In a social media post, Trump asserted that Iran’s military has been “decimated” and he no longer felt the need for assistance from NATO countries or anyone else.
Last week, Trump had sought help from European nations and others who depend on oil supplies transiting from the Hormuz Strait to safeguard the critical waterway.
“The United States has been informed by most of our NATO “Allies” that they don’t want to get involved with our Military Operation against the Terrorist Regime of Iran, in the Middle East, this, despite the fact that almost every Country strongly agreed with what we are doing, and that Iran cannot, in any way, shape, or form, be allowed to have a Nuclear Weapon,” the US President said in a post on Truth Social.
Iran's attacks on Gulf nations and its grip on the Strait of Hormuz, through which a fifth of the world's oil is transported, have sparked increasing concerns of a global energy crisis and are unnerving the world economy.
“I am not surprised by their action, however, because I always considered NATO, where we spend Hundreds of Billions of Dollars per year protecting these same Countries, to be a one-way street — We will protect them, but they will do nothing for us, in particular, in a time of need,” Trump said.
He said Australia, Japan and South Korea too have turned down his call for help.
“Fortunately, we have decimated Iran’s Military – Their Navy is gone, their Air Force is gone, their Anti-Aircraft and Radar is gone and perhaps, most importantly, their Leaders, at virtually every level, are gone, never to threaten us, our Middle Eastern Allies, or the World, again,” Trump said.
He said that given the scale of recent military successes, the US no longer "need" or desires assistance from NATO countries, adding that it never relied on such support in the first place.
Speaking as President of the United States, the "most powerful" country in the world, "we do not need" help from anyone, Trump said.
The West Asia conflict began on February 28 when the US-Israeli combine conducted airstrikes on Iran.
The Strait of Hormuz, the narrow waterway that connects the Persian Gulf to the open ocean, has effectively been shut following the US and Israel attack on Iran and Tehran's sweeping retaliation.
However, Iranian Foreign Minister Abbas Araghchi had said that from Tehran's "perspective", the strait is "open". "It is only closed to Iran's enemies, to those who carried out unjust aggression against our country and to their allies.”
Earlier in the day, a second Indian-flagged LPG tanker, Nanda Devi, reached the country after safely sailing from the war-hit Strait of Hormuz. On Monday, the first ship, Shivalik, reached Mundra port in Gujarat.
As of now, 22 Indian vessels remain on the west side and two on the east side of the strait.
Indian authorities are in constant touch with all the relevant stakeholders in the region to secure the safe passage of the remaining ships, officials said.
