The Giant Fall
The rise and fall of Ravi Parthasarathy, the former CEO of Infrastructure Leasing & Financial Services (IL&FS), has been as dramatic as the saga of his storied firm. The company, a pioneer in public private partnerships (PPP) in India, with expertise in planning and executing projects in the infrastructure space, came under scrutiny after it defaulted on loans, shaking up India’s non-banking financial company (NBFC) segment. Parthasarathy, known to hold immense clout in political circles, was the company’s face for three decades, but is now being held responsible for the events that led to the firm’s fall. Some say IL&FS grew too big too fast, branching out into over 200 subsidiaries, funding long-term projects of over 10 years, but borrowing for a lesser duration, widening the asset-liability gap. In the process, it also amassed debt of Rs 91,000 crore. Fearing a collapse would lead to a larger disruption of the NBFC space, the government dragged the firm before the National Company Law Tribunal (NCLT), which allowed the government to replace its 15-member board. The new board, led by banker Uday Kotak as non-executive chairman, has put Rs 30,000 crore worth of road assets on the block, amounting to a third of the company’s liabilities. Parthasarathy, who was abroad for treatment when the crisis panned out in October, has since returned to India as he was wanted for questioning by the Serious Fraud Investigations Office. He is now reportedly seeking permission to travel abroad for treatment once again. Meanwhile, the crisis at IL&FS has sparked a debate on the need for a stimulus to revive the NBFC segment, with the government even reportedly pushing the Reserve Bank of India for a special liquidity window for the sector.