One of the options the government is exploring to resolve crisis-hit IL&FS’ financial woes is to sell it, Corporate Affairs Secretary Injeti Srinivas said on Monday.
“Whatever is in the best interest of the stakeholders, including public interest, will be the factor which will guide a resolution,” Mr. Srinivas said. “As far as IL&FS is concerned, I think the report which has been submitted to the NCLT [National Company Law Tribunal] articulates the approach. So, it could be in the best scenario that IL&FS as a group enterprise is sold as a going concern.”
However, the Secretary said that the likelihood of this outcome actually taking place was limited.
“There are alternative approaches of looking at separate verticals, and verticals going as one consolidated entity,” he added.
“And the last approach is that you have an asset level sale. All the three approaches in some sort of permutation and combination can ultimately be the outcome.”
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The Corporate Affairs Ministry has reportedly compiled a detailed report, in which it has named Indiabulls Housing Finance, PNB Housing Finance and Dewan Housing Finance Corporation, as companies facing problems due to the prevalent liquidity crunch.
However, Mr. Srinivas officially declined to name the companies involved.
“I won’t get into individual names, it is a segmental problem and these are big entities part of that segment,” he said. Mr. Srinivas said that the liquidity problem was more pronounced among a segment of NBFCs, but added that the steps taken by the government and the Reserve Bank of India would resolve this.
Both PNB Housing Finance and Dewan Housing Finance Corporation issued statements on Monday saying that their liquidity position was comfortable.
“PNB Housing Finance Limited is comfortably placed with respect to the Asset Liability Management (ALM) position,” the company said in a statement.
“In the 0-1 year bucket, we are broadly matched on ALM. Our short term borrowing has reduced from 17.5% in March 2018 to 11.7% in September 2018. On 1-3 year bucket, we are borrowing long term viz ECB, and more sticky public deposits and are comfortable with our mix.” “Further, our borrowing in the last one month represents our strength in the borrowing market as we raised more than ₹6,000 crore through commercial papers (CP) and $200 million through External Commercial Borrowing under automatic route,” the company added. Dewan Housing Finance Corporation said that it was in the process of raising much more resources to increase the liquidity level so that “the company continues to remain well-equipped to meet all the financial obligations”.
“Despite the market scenario, DHFL has been committed towards honouring all the financial obligations without any delays,” Kapil Wadhawan, CMD of DHFL said.
“DHFL has taken strong steps to rebalance its loan growth profile, maintain sufficient liquidity and strengthen its core balance sheet.”
Towards this, Mr. Wadhawan said the company had bought back or repaid several commercial papers totalling ₹9,465 crore from September 21 to November 5, 2018.
