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'IL&FS raised loans to pay dividends to govt, shareholders'

ANI | Updated: Oct 01, 2018 23:25 IST

New Delhi [India], Oct 1 (ANI): Government sources on Monday said that debt-ridden Infrastructure Leasing & Financial Services Limited (IL&FS) raised loans to pay dividends to the government and shareholders, adding that the Board of the company was kept in the dark regarding the discrepancies.
"The government noticed the mismanagement of IL&FS during the IPO of subsidiary company when they got a complaint by an investor that the deployment of funds was not appropriate. The value of the investment has been eroded by 60 per cent due to inappropriate placement of funds," the source revealed.
This comes hours after the National Company Law Tribunal (NCLT) permitted a six-member panel comprising government-nominated individuals to supersede the IL&FS board.
The sources said that the first meeting of the new board is likely to be held on Wednesday. The Board will tabulate an assessment report in a fortnight after assessing financial and liquidity position of the firm.
Furthermore, the Board is expected to look into immediate short-term payment obligations, restructuring long-term loans and review decisions of the previous management, following which a shareholders' meet will be held. Investigation will also be done regarding the role of auditors, in the wake of the ongoing crisis.
As per the top government source, massive lack of liquidity has been detected in current and non-current assets of IL&FS. While 50 per cent of current assets are locked in receivables, an equal amount of non-current assets, too, are intangible.
Furthermore, the source said that over-leveraging of about 10 times of the net worth was done in IL&FS, adding that servicing of debt, too, is going to be a major challenge. (ANI)