oppn parties IL&FS: How Will Uday Kotak Clear The Mess?

News Snippets

  • Kapil Sibal leaves Congress, fills nomination for Rajya Sabha with SPs backing
  • RBI bans 5 NBFCs as it cracks down on e-lending platforms
  • Hindustan Motors to tie-up with Peugeot to bring out a redesigned version of the iconic Ambassador
  • GST Council to defer rate rejig due to inflation
  • Centre to sell 29.5% in Hindustan Zinc at an expected price of Rs 38000cr
  • Stocks remain negative on Wednesday: Sensex loses 303 points to 53749 and Nifty 99 to 16025
  • IPL: RCB beat LSG by 14 runs and end their dream run. Rajat Patidar scores a brilliant 112. RCB will take on RR to decide who goes through to the finals
  • Delhi Additional district judge Nikhil Chopra says there is no legal right for people seeking to worship deity inside Qutab Minar, says it survived 800 years without worship so "let it survive like that"
  • Punjab chief minister Bhagwant Mann sacks state health minister Vijay Singla over corruption charges. Singla was later arrested by the ACB
  • Protestors burn the house of Andhra minister P Viswaroop and MLA Satish Kumar over renaming of Konaseema district as B R Amberdkar Konaseema
  • Gyanvapi: Varanasi district judge decides to first hear the 'maintainability' plea filed by mosque management
  • Delhivery and Venus Pipes shares list at premium of 10% and 8.7% respectively even when market sentiment was down
  • In a bid to cool edible oil prices, Centre allows duty-free imports of 20 lakh tonnes each of crude sunflower oil and crude palm oil per annum this year and next
  • Centre caps sugar exports to ensure availability of stocks in the domestic markets to cool prices
  • Stock markets get the jitters as RBI signals rate hike and government moves in to control inflation: Sensex tumbles by 236 points to 54052 and Nifty goes down by 89 points to 16125
Yasin Malik of JKLF gets two life terms in terror funding case /////// Kashmir TV artist killed and her nephew injured in a terror attack in Hushroo in Budgam district
oppn parties
IL&FS: How Will Uday Kotak Clear The Mess?

By Ashwini Agarwal
First publised on 2018-10-03 14:52:25

The government has done well to supersede the board of the troubled IL&FS Ltd. and appoint a six-member board under the chairmanship of Uday Kotak to try and clear the mess the company finds itself in. The IL&FS fiasco had the potential to snowball into a major payments crisis that could have shattered the Indian financial system, bringing down mutual funds, stock markets, insurance companies, banks and NBFCs. On paper, the group has, through a maze of subsidiaries, more assets than liabilities. But none of its assets are likely to fetch the market price in these troubled times, making a bail-out necessary.

Although brewing for a few months, the crisis finally erupted when on September 14, the company defaulted in payments of bank loans and interest, deposits and commercial paper obligations. Subsequently, it also failed to pay back inter-corporate deposits, leading to a ratings downgrade. It created panic in the financial markets.

The first task that the new board faces is to unravel the links of the maze of companies that the group controls. It also has to take stock of the assets on the books, some of which like the ones in the energy and transport sectors are almost duds, and evaluate them. Then, it will have to prepare a roadmap of how the issue will be resolved. The markets will have to prepare themselves for a long haul as all this cannot be done in a hurry.