Insolvent IL&FS to eliminate 65% jobs
04 December 2018
Insolvent Infrastructure Leasing & Financial Services Ltd (IL&FS) plans to eliminate nearly two-thirds of the jobs across the group as part of the efforts to revive the systematically important infrastructure lender.
A new board of directors headed by banker Uday Kotak appointed by the government to revive IL&FS has initiated various measures to cut costs, including a reduction in its manpower by 65 per cent, thereby reducing its Rs 1,066-crore wage bill by half, according to the company’s exchange filing.
The group will also cut salaries and discontinue consultancy services of retired employees, helping it save another Rs100 crore a year.
The new board, which took over as the government tried to prevent a contagion in the financial markets, is looking at asset sales, capital infusion and cost cuts to rescue the group which has a debt of about Rs91,000 crore.
While IL&FS is reported to have a workforce of about 4,500 people, most of the IL&FS group companies do not generate enough cash to sustain operations.
After reviewing more than 165 entities within the IL&FS group, the new board of the debt-laden conglomerate said it found close to 100 entities with operational cash gap till 31 March 2019.
This means is that these 100 entities could default on their debt obligations and perhaps, stop working. These include some of the key entities such ITNL, Elsamex (India) and several other subsidiaries of ITNL, IL&FS Energy Development Company Ltd (the holding company for the energy vertical) and several of its subsidiaries, IL&FS Engineering & Construction Company Ltd, IL&FS Environmental Infrastructure & Services Ltd Holding company and several of its subsidiaries, IL&FS Skill Development Corporation Ltd, IL&FS Technologies Limited Holding Company, IL&FS Township & Urban Assets Ltd, IL&FS Maritime Infrastructure Company Limited Holding company.
Over the last few months, IL&FS and some of its arms have defaulted on banks loans, commercial papers and non-convertible debentures, as per a report submitted by IL&FS to the ministry of corporate affairs.
As part of the liquidity management exercise, the report said the Resolution Advisor (Alvarez & Marsal India Pvt Ltd) has undertaken steps to assess short and medium-term liquidity requirements of various entities, develop 13-weeks cash flow forecast to optimise cash flow, prioritise outflows that will enable the entity to generate further cash inflows to ensure operational sustenance and implement a robust control mechanism and provide update to the new board.