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Mumbai/New Delhi, Oct 1 : Under all-round attack over the crisis in the IL&FS, the Central government on Monday superseded the management of the beleaguered company by appointing a six-member Board led by banker Uday Kotak to restore the financial solvency of the debt-stricken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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Another North Goa nightclub sealed; Kejriwal says corruption led to fire tragedy
Panaji (PTI): As part of a crackdown against tourist establishments violating laws and safety norms in the aftermath of the Arpora fire tragedy, Goa authorities on Saturday sealed a renowned club at Vagator and revoked the fire department NOC of another club.
Cafe CO2 Goa, located on a cliff overlooking the Arabian Sea at Vagator beach in North Goa, was sealed. The move came two days after Goya Club, also in Vagator, was shut down for alleged violations of rules.
Elsewhere, campaigning for local body polls, AAP leader Arvind Kejriwal said the fire incident at Birch by Romeo Lane nightclub at Arpora, which claimed 25 lives on December 6, happened because the BJP government in the state was corrupt.
An inspection of Cafe CO2 Goa by a state government-appointed team revealed that the establishment, with a seating capacity of 250, did not possess a no-objection certificate (NOC) of the Fire and Emergency Services Department. The club, which sits atop Ozrant Cliff, also did not have structural stability, the team found.
The Fire and Emergency Services on Saturday also revoked the NOC issued to Diaz Pool Club and Bar at Anjuna as the fire extinguishers installed in the establishment were found to be inadequate, said divisional fire officer Shripad Gawas.
A notice was issued to Nitin Wadhwa, the partner of the club, he said in the order.
Campaigning at Chimbel village near Panaji in support of his party's Zilla Panchayat election candidate, Aam Aadmi Party leader Kejriwal said the nightclub fire at Arpora happened because of the "corruption of the Pramod Sawant-led state government."
"Why this fire incident happened? I read in the newspapers that the nightclub had no occupancy certificate, no building licence, no excise licence, no construction licence or trade licence. The entire club was illegal but still it was going on," he said.
"How could it go on? Couldn't Pramod Sawant or anyone else see it? I was told that hafta (bribe) was being paid," the former Delhi chief minister said.
A person can not work without bribing officials in the coastal state, Kejriwal said, alleging that officers, MLAs and even ministers are accepting bribes.
