MUMBAI: Debt laden ILFS is likely to default on payment of Rupees 1,000 crore commercial papers in September as it struggles to raise capital and deleverage its balance sheet.
The company is likely to default on payment of around Rupees 1,000 crore commercial papers and other papers this month, said a source close to the development.
The company has defaulted on unsecured loan to SIDBI and is likely to default on more in the coming weeks.ILFS board had met on Saturday to discuss strategies including raising authorised capital from promoter group, equity through rights issue and additional lines of credit and asset monetisation towards various projects.The board had discussed raising lines of credit of Rupees 3,500 crore from Life Insurance Corporation and State Bank of India to meet temporary requirements to enhance its liquidity profile.The board discussed raising authorised capital by Rupees 2,500 crore for which approval will come at the EGM on September 29, said a source close to the development.As on March 31, 2018, Life Insurance Corporation of India (LIC) and ORIX Corporation Japan were the largest shareholders in ILFS with their stake holdings at 25.34 per cent and 23.54 per cent respectively.
Other prominent shareholders include Abu Dhabi Investment Authority ADIA (12.56 per cent stake), HDFC (9.02 per cent), Central Bank of India (7.67 per cent) and SBI (6.42 per cent).On companys elevated debt levels and liquidity pressures, rating company rating company Icra has downgraded NCDs of ILFS to BB from AA+ on higher levels of debt and inability to raise funds as quickly as is needed.
The group has around Rupees 1 lakh crore worth of debt on its books.
It has identified assets for sale.
The process will take 3-6 weeks.Further investments by large promoters will depend on the availability of line of credit from lenders.
The company is looking to raise Rupees 4,500 crore through rights issue and it expects to reduce overall debt by Rupees 30,000 crore by offloading some of its assets.
It has already defaulted on payment of Rupees 450 crore.