Chairman Uday Kotak said that the board has strengthened the management by appointing CS Rajan as managing director and bringing in chief executives for various verticals. Vineet Nayyar has been repositioned as executive vice-chairman. “We have a solid management team to manage the resolution process,” said Kotak.
Highlighting the need to continue with the freeze on any payout by IL&FS, which has Rs 94,000 crore of fund-based debt, Kotak said that a period of calm was required for orderly liquidation of assets.
“The concept of group financial liquidation of a complex firm like this is a first of its kind. We have to ensure that there is a fair treatment to different classes of creditors as there is a wide variety of them with conflicting interest,” said Kotak.
He added that it was for the court to decide on lifting the freeze on payout as there were secured and unsecured creditors at different levels. “We are going to look at a solution to a broad set of creditors and not just banks, which have half of the debt. We have recommended a process, which is the IBC. Finally, it is for courts to decide which way resolution and distribution will happen in public interest. There is a large amount of public money at stake here,” said Kotak.
In the presentation, COO N Sivaraman said that assets of group businesses, which have debt of around Rs 40,000 crore, have been put on the block. The bulk of these are in the roads sector (Rs 26,000 crore). However, the process is expected to get delayed as a couple of other infrastructure companies are selling their road assets, which are also being examined by the same set of bidders.
Even as the board is working on a resolution, there is an investigative process going on which could lead to more criminal action. Deputy managing director Bijay Kumar said investigation is expected to reveal how money was moved out and whether there has been gold-plating in the group’s assets. According to Kotak, the bankruptcy code was not an option. “The question we have to ask is, what if we had 200 companies, with significant amount of cross-lending and layering, going to NCLT?” said Kotak. “Given that the earliest resolution in the NCLT has taken one-two years, how does it work for 100 companies?”