IL&FS board moves to tighten the belt

May wield axe on per­son­nel spend; sets up full au­dit

The Hindu Business Line - - FRONT PAGE -

Kick-start­ing the process of pulling IL&FS out of fi­nan­cial cri­sis, its newly ap­pointed seven-mem­ber board, headed by Uday Ko­tak, on Fri­day de­cided to ini­ti­ate aus­ter­ity mea­sures re­lat­ing to per­son­nel and op­er­at­ing ex­penses. The board also ini­ti­ated a full au­dit of the stand­alone and con­sol­i­dated accounts of the com­pany as on Septem­ber 30, 2018.

The board, which met for the sec­ond time, has named direc­tors from among the present board as nom­i­nee direc­tors on IL&FS’ eight sub­sidiaries, in­clud­ing IL&FS Fi­nan­cial Ser­vices, IL&FS Trans­porta­tion Net­works, and IL&FS En­gi­neer­ing & Con­struc­tion Com­pany.

In the wake of de­faults by IL&FS and its arms on some of their debt obli­ga­tions and the rip­ple ef­fect on the fi­nan­cial sys­tem, the board of IL&FS was su­per­seded on Oc­to­ber 1 by the Mum­bai spe­cial bench of the Na­tional Com­pany Law Tri­bunal on a pe­ti­tion by the Min­istry of Cor­po­rate Af­fairs.

The full au­dit as­sumes sig­nif­i­cance in the back­drop of the new board be­ing made aware of 348 en­ti­ties as be­ing part of the group, sig­nif­i­cantly higher than the 169 dis­closed.

In FY2018, the con­sol­i­dated em­ployee ben­e­fit ex­penses of IL&FS (and its nu­mer­ous arms) rose 8 per cent year-onyear (YoY) to ₹1,238 crore. These ex­penses were 6 per cent of the to­tal ex­penses (con­sol­i­dated). In FY2018, the to­tal ex­penses (con­sol­i­dated) of IL&FS were ₹20,908 crore.

Within the con­sol­i­dated ex­penses, other op­er­at­ing and ad­min­is­tra­tive ex­penses saw a 37 per cent year-on-year in­crease to ₹4,090 crore.

The aus­ter­ity mea­sures could fo­cus on ex­penses re­lat­ing to ‘pro­gramme im­ple­men­ta­tion’, which jumped 45 per cent YoY, ‘toll man­age­ment fees, which soared from ₹4.3 crore in FY17 to ₹94 crore in FY18, and the 38 per cent YoY rise in ‘pro­vi­sion for over­lay ex­penses’. Fur­ther, cut­backs are ex­pected in rent (₹163 crore), travel and con­veyance (₹99 crore), com­mu­ni­ca­tion (₹27 crore) and mis­cel­la­neous ex­penses (₹513 crore).

The board, which de­lib­er­ated on the roadmap, ap­proved the for­ma­tion of a core op­er­at­ing com­mit­tee un­der Vice-Chair­man & Man­ag­ing Di­rec­tor Vi­neet Nay­yar.

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