Lok Sabha Question No. 886 (UNSTARRED), answered on 2018-12-14
Subject: IL&FS
Ministry: FINANCE
Asked by: VINAYAK BHAURAO RAUT, M. K. RAGHAVAN, PRITAM GOPINATH MUNDE, DHARMENDRA YADAV, SHIVAJI ADHALRAO PATIL, Shrirang Appa Barne

## Government  of India Ministry of Finance Department  of Economic  Affairs

## LOK SABHA

## UNSTARRED  QUESTION  NO. 886

TO BE ANSWERED ON FRTDAY, DECEMBER 14, 20I8/AGRAHAYANA  23,1g40(sAKA)

IL&FS

QUESTToN

886  : SHRI YINAYAK BHAURAo RAUT: SHRI M.K. RAGHAVAN: DR PRITAM GOPINATH  IViUNDE: SHRI DHARMENDRA  YADAV: SHRI ADHALRAO PATIL SHIVAJIRAO: SHRI SHRIRANG APPA BARNE:

Will the Minister of FINANCE  be pleased  to state:

- (a) whether the ratings of project financier Infrastructure  Leasing  & Financial Services Limited  (II&FS)  and its subsidiary  IL & FS Fi";;ial s.*'i"., were sharply downgraded,  if so, the details thereof and the main reasons behind troubles  of  IL&FS; L J
- (b) whether the Govemment has assessed impact  of debt ridden IL&FS on financialtystem,  if
- (c) whether road construction  is undertaken by IL&FS mainly through special purpose vehicles floated by its subsidiary  IL&FS Transportation  Networr.r  OrNii, if so, the details thereof;
- (d) whether  there have been claims  made by IL&FS that the crises  would have  been avoided if the money released  by the concession  authorities  were released  on time,  if so, the details thereof;
- (e) whether there is differences  between  the RBI & the Government  on the bailout of IL&FS and if so, the cases of difference and details of the dispute;  and
- (0 whether the Government has worked out remedial measures to address the problem faced by the IL&FS and its subsidiarv,  if so, the details thereof and the steps taken by the Govemment  to safeguard  the interest oiinvestors?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (sHRr PON.  RADHAKRTSHNAN)

*

(a) : Non-convertible  Debentures  (NCDs)  issued  by IL&FS and its subsidiary IL&FS Financial Services  Ltd. (IFIN) were tlowngraded  fiom A\rAA (stuut.;  rating in March  z'ott to AA+/AA in August 2018, and was further downgraded  to BB/C and thlreafter  to D in September  201g.

As informed  by Reserve Bank of India,  IL&FS Transportation  Networks  Limited  (ITNL), 91e^ofthe group companies  started defaulting in repayment  of their borrowed funds since June 21,2018 which was followed by start of default uy rlrs and IFIN on August 25, and,August 28,2018 respectively. The group is mainly into infrastructure projects. Delay in acquiring  land for various projects and consequent delayed  execution led to aehyed  receipts of payment and availing of refinance  and take-over  finance  from other institutions,  including'banks,  over the

tenor of the projects. To keep them going, ILFS and IFIN borrowed and provided  funds to the ITNL and other group entities.  It included  raising of Commercial Papers, Certificate  of Deposits,  Inter Corporate  Deposits,  which are short term in nature, and calling for frequent  roll overs, embedding illiquidity into the balance sheets of the companies. The Companies and Special  Purpose Vehicles (SPV) exhausted  their funding limits-with banks. In the above backdrop, ITNL began to default from June 2018 and it spread to ILFS and IFIN.

(b) : Yes.  'Ihe  Financial  Stability  and Development Council  (FSDC) in its 19tr meeting  held on 30ft October, 2018, inter alia. discussed  at length the current liquidity  situation, including segmental liquidity  position in Non-Banking  Financial Companies' (NBFCs) and mutual fund space.

(c) : As informed by IL&FS, the road construction projects are being undertaken  by special purpose  vehicle entities incorporated  by ITNL. Details of the projects  are at Annexure.

(d) : In the petition  under Section 230 of the Companies  Act,2013  filed on 24 September  2018 (by the previous management) before the National  Company Law Tribunal, Mumbai Bench,  it was stated that (i) various SPVs of ITNL had filed claims against concessioning  authorities aggregating to INR 10,288 crores and in particular, IL&FS's funds had been depleted primarily due to frequent deployment of funds into ITNL and its SPVs; and (ii) that ITNL and its SPVs have been awaiting payment from various concession authorities for the relevanl  projects for the past 2-3 years.

(e)  : Bail out of I[,&FS is not dealt with by RBI.

(I) : The Government superseded the existing Board of IL&FS, and appointed  a new Board of Directors on I October  2018. T'he new Board is tasked with the responsibility of preparing a robust and time bound resolution plan.

****

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Annexure as referred to in reply to part (c) of the Lok Sabha Unstarred Question  No. 886 for 14.12.2018  raised by Hon'ble Members  Of Parliament, Shri Vinayak  Bhaurao Raut' Shri IU.K Raghavan,  Dr. Pritam  Gopinath  Munde,  Shri Dharmendra  Yadav, Shri Adhalrao Petil ShlvaJirao end Shri Shrirang  Appa Bame regarding  *IL&FS'

## DETAILS OF ROAD PROJECTS TDIDERTAKEN BY ITI\IL AI\ID ITS IITDIAN  ST'BSIDIARIES

|     | 's&                                                     | .;:Autkg,{p.                                       | r**.=.il            | $tatu{                     |
|-----|---------------------------------------------------------|----------------------------------------------------|---------------------|----------------------------|
| I   | Jharkfiand Road Projects Implementation Company Limited | Government of Jharkand                             | Annuity             | Operational                |
| 2   | Thiruvananthapuram Road Development Company Limited     | Govemment of Kerala                                | Annuity             | Operational                |
| 3   | Karyavattom Sports Facilities Limited                   | Govemment of Kerala                                | Annuity * user fees | Operational                |
| 4   | East Hyderabad Expressway Limited                       | Hyderabad Urban Development Authority ("HUDA")     | Annuity             | Operational                |
| 5   | Hazartbadb Ranchi Expressway Limited                    | National Highways Authority of India ("NHAI')      | Annuity             | Operational                |
| 6   | Jorabat Shillong Expressway Limited                     | NHAI                                               | Annuity             | Operational                |
| 7   | Chenani Nashri Tunnelway Limited                        | NHAI                                               | Annuity             | Operational                |
| 8   | North Karnataka Expressway Limited                      | NHAI                                               | Annuity             | Operational                |
| 9   | Road Infrastructure Development Company of Rajasthan    | Govemment of Rajasthan                             | Toll                | Operational                |
| l0  | RIDCOR Infra Projects Limited                           | Govemment of Rajasthan                             | Toll                | Operational                |
| l1  | Sikar Bikaner Highway Limited                           | Ministry of Road Transport and Highways ("MORTH',) | Toll                | Operational                |
| l2  | West Gujarat Expressway Limited                         | NHAI                                               | Toll                | Operational                |
| t3  | Pune Sholapur Road Development Company Limited          | NHAI                                               | Toll                | Operational                |
| 14  | Moradabad Bareilly Expressway Limited                   | NHAI                                               | Toll                | Operational                |
| l5  | Baleshwar Kharagpur Expressway Limited                  | NHAI                                               | Toll                | Operational                |
| 16  | Barwa Adda Expressway Limited                           | NHAI                                               | Toll                | Operational                |
| t7  | Rapid MetroRail Gurgaon Limited                         | Govemment of                                       | User fees           | Operational                |
| 18  | Rapid MefroRail Gurgaon South Limited                   | Haryana                                            | User fees           | Operational                |
| l9  | MP Border Checkpost Development Company Limited         | Government of Madhya Pradesh                       | User fees           | Operational                |
| 20  | ITNL Road Infrastructure Development Company Limited    | MORTH                                              | Toll                | Operational                |
| 2l  | Khed Sinnar Expressway Limited                          | NHAI                                               | Toll                | Operational                |
| a.) | Jharkhand lnfrastructure Implementation Company Limited | Govemment of Jharkhand                             | Annuity             | Under Construction (92o/o) |
| 23  | Rail Over Bridges, Gujarat                              | Govemment of Gujarat                               | Annuity             | Under Construction         |

|                     |                                               |                                                                                  |                     | (5o/o)                     |
|---------------------|-----------------------------------------------|----------------------------------------------------------------------------------|---------------------|----------------------------|
| 24                  | Srinagar Sonmarg Tunnelway Limited            | National Highways and Infrastructure Development Corporation Limited (.NTIIDCL') | Annuity             | Under Construction @zva    |
| 25                  | Fagne Songadh Expressway Limited              | N}JAI                                                                            | Toll                | Under Construction (6s%)   |
| -zo                 | Amravati Chikhli Expressway Limited           | M.IAI                                                                            | Toll                | Under Construction (22o/o) |
| 27                  | Kiratpu( Ner Chowk Expressway Limited         | NTIAI                                                                            | Toll                | Under Construction (620/0) |
| MINORITY INTf,RESTS | MINORITY INTf,RESTS                           | MINORITY INTf,RESTS                                                              | MINORITY INTf,RESTS | MINORITY INTf,RESTS        |
| I                   | Noida Toll Bridge Company Limited             | New Okhla Industrial Development Authority                                       | Toll                | Operational                |
| ?                   | Warora Chandrapur Ballarpur Toll Road Limited | Govemment of Maharashtra                                                         | Toll                | Operational                |
| 3                   | Ramky Elsamex Hyderabad Outer Ring Road       | }{UDA                                                                            | Atmuity             | Operational                |
| EPC                 | EPC                                           | EPC                                                                              | EPC                 | EPC                        |
| I                   | Zojtlla                                       | NHIDCL                                                                           | EPC                 | Under Construction (0o/o)  |
| 2                   | Chennai Metro Rail Stations                   | Chennai Metro Rail Limited                                                       | EPC                 | Under Construction (42o/o) |
| 3                   | MPRDC -2                                      | Madhya Pradesh Road Development Corporation                                      | Item rate           | Under Construction (18%)   |
| 4                   | MPRDC . 10                                    | Madhya Pradesh Road Development Corporation                                      | Item rate           | Under Construction (30%)   |
| 5                   | MPRDC . 11                                    | Madhya Pradesh Road Development Corporation                                      | Item rate           | Under Construction (25o/o) |