New IL&FS board set to propose sale of all firms

New Delhi, Oct. 30: India is considering selling Infrastructure Leasing and Financial Services (IL&FS) or divesting some of its assets as it seeks to end the company’s debt crisis, a person with direct knowledge of the matter said on Tuesday.

The Indian government took control of IL&FS, a major infrastructure financing and development company, this month after it defaulted on some of its debt, triggering fears of contagion across India’s financial system.

The government-appointed board plans to propose a sale of the whole firm, some of its units or individual road projects to the National Company Law Tribunal on Wednesday, the source said.

It could take six to nine months to fully address the problems at IL&FS, whose shareholders include Japan’s Orix Corp and Abu Dhabi Investment Authority, the source said.

“We will be able to gauge buyers’ interest only when we hit the market,” the source said, adding that IL&FS had road building projects totalling about 12,000 kilometres that could be sold to buyer who would finish the work and collect tolls.

IL&FS’s subsidiaries include transport network builder IL&FS Transportation Networks, engineering and procurement company IL&FS Engineering and Construction Co Ltd and financier IL&FS Financial Services Ltd.

IL&FS defaulted on some debt it owes banks in recent weeks, and its credit rating has been downgraded to junk.

The defaults triggered sharp falls in Indian stock and debt markets amid fears about risk in the rest of the country’s financial sector. The Indian government took control of the company and replaced its board with six nominees.

— Reuters