Crisis self inflicted by LIC?

The newly-formed IL&FS board under chairmanship of Uday Kotak may dig out the truth behind the drastic fall of infrastructure major, but some bizarre revelation still haunts the past.

The callous attitude of the then top management in LIC, the majority stakeholder of IL&FS, pushed the infrastructure major into the debt trap following a rift between the leadership team of the insurer three years ago. The present financial mess at IL&FS could have been averted if the proactive measures were taken then.

A top LIC source told Financial Chronicle that way back in 2015, the current LIC chairman, VK Sharma, during his tenure as managing director of LIC and nominee director at IL&FS board (from 2012 to 2016) did not allow the then LIC chairman SK Roy to sell IL&FS stake to Piramal Group, one of the premier investors then. Had the deal gone through then, the present crisis would have averted.

“Sharma wanted IL&FS shares to be sold at a fair price of `1,250 per share, which was discovered in 2014 when an investor was roped in to invest in the infrastructure conglomerate.

This was just before IL&FS landed in financial trouble. In 2015, the same price was never possible for Piramal Group, keeping in view the fact that the stem had already been rotting at IL&FS since 2014 itself with severe depreciation in the share value of the company," the source said.

Sharma, who will retire in December this year, also served as director on the board of IL&FS between 2012 and 2016. The serious charges made against the chief of insurer came just after the government took over the management of `90,091 crore debt-ridden IL&FS.

The source further said that Piramal Enterprises had also attempted again to offer `750 per share initially, and after a hard bargain with the insurer, it had agreed for `850 per share to buy IL&FS stake in 2015 too.