New Delhi/Mumbai (IANS): Financially strained unlisted holding company IL&FS has sought the Central government's support to avert a looming default crisis.
Reports appearing on Monday said that the Finance Ministry was approached after the IL&FS' key stakeholder, the state-run Life Insurance Corporation and others rejected a Rs 3,000 crore loan facility.
According to reports, the company requires this amount to avert default on its Commercial Paper (CP) obligations and a ratings downgrade.
LIC is the largest shareholder in IL&FS with a 25.34 per cent stake while the state-owned State Bank of India has a 6.42 per cent stake.
The two financial institutions are, in turn, under the supervision of the Department of Financial Services (DFS).
According to reports, however, the Ministry appears to have taken an adverse view of the proposal by IL&FS to stave-off the looming debt crisis.
When contacted, the Ministry did not respond to queries by IANS on the issue.
As part of its fund-raising plans, the company's board had, on August 29, approved a Rights Issue of 30 crore equity shares at Rs 150 per share aggregating to Rs 4,500 crore to shore up its capital. The process would be completed by October 30, the company had said in a statement earlier.
"As on March 31, 2018, IL&FS net worth was Rs 7,400 crore. In addition, the Board approved the re-capitalization of group companies to the extent of Rs 5,000 crore in IL&FS Financial Services, IL&FS Transportation, IL&FS Energy, IL&FS Environment, and IL&FS Education," the company said.
"The Board also approved the Company's specific asset divestment plan based on which IL&FS expects to reduce its overall debt by Rs 30,000 crore. Out of a portfolio of 25 projects identified for sale, firm offers have already been received for 14 projects."
The August 29 statement had also said that the company expects to complete its divestment plan over the next 12 to 18 months in a systematic and professional way to fulfil its commitments.
The group has around Rs 1 lakh crore worth of debt on its books.
IL&FS companies form an ecosystem of expertise across infrastructure, finance and social and environmental services
Initially promoted by the Central Bank of India, Housing Development Finance Corporation Limited and Unit Trust of India, IL&FS was incorporated in 1987.
Over the years, it has inducted institutional shareholders including SBI, LIC, ORIX Corporation of Japan, and Abu Dhabi Investment Authority (ADIA).
As on March 31, 2018, LIC and ORIX Corporation are the largest shareholders in IL&FS with their stake holding at 25.34 per cent and 23.54 per cent respectively. Other prominent shareholders include ADIA (12.56 per cent stake), HDFC (9.02 per cent stake), CBI and (7.67 per cent stake) and SBI (6.42 per cent stake).