Shares of ILFS Group companies extended their gains on Wednesday after state-owned insurer LIC said it will not allow debt-ridden ILFS to collapse and explore options to revive it.The scrip of ILFS Engineering and Construction Company gained over 7 per cent in the early session while ILFS Transportation Networks jumped as much as 4 per cent on the BSE.
ILFS Investment Managers was up 7.64 per cent at Rs 8.03.Shares of ILFS group companies rallied up to 12 per cent on Tuesday.Life Insurance Corporation (LIC) is the largest shareholder in ILFS.
LIC Chairman V K Sharma, after a meeting at the finance ministry, said efforts are being made to keep ILFS afloat, according to PTI.We will ensure ILFS does not collapse.
We will not allow contagion to spread from ILFS All options are open (including raising stake in the company), he said.ILFS Financial Services, a group company of ILFS, defaulted on one of its commercial paper (CP) issuances due for repayment on Monday.
This was the third default by the company.The infrastructure development and finance group has been facing liquidity issues for some time now.ILFS, which is credited with building the longest tunnel in the country (the Chenani-Nashri tunnel), is sitting on a debt pile of around Rs 91,000 crore and had been downgraded to junk status by rating agencies following the default.