oppn parties IL&FS: How Will Uday Kotak Clear The Mess?

News Snippets

  • The Army conducts an operational alert exercise in eastern Ladakh
  • The IAF reopened the Vijaynagar advance landing ground, an airstrip in Arunachal Pradesh near the Chinese border
  • Amit Shah says he never sought to impose Hindi
  • Government bans the manufacture and sale of e-cigarettes in India
  • Mamata Banerjee seeks an appointment with Home Minister Amit Shah today
  • Bengal CM Mamata Banerjee meets PM Modi in what she later described as a government-to-government meeting
  • Supreme Court sets a deadline of October 18 for completing the hearings in the Ayodhya case
  • Pakistan rejects India's request for use of its airspace when PM Modi flies to the US later this week
  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
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IL&FS: How Will Uday Kotak Clear The Mess?

By Ashwini Agarwal

The government has done well to supersede the board of the troubled IL&FS Ltd. and appoint a six-member board under the chairmanship of Uday Kotak to try and clear the mess the company finds itself in. The IL&FS fiasco had the potential to snowball into a major payments crisis that could have shattered the Indian financial system, bringing down mutual funds, stock markets, insurance companies, banks and NBFCs. On paper, the group has, through a maze of subsidiaries, more assets than liabilities. But none of its assets are likely to fetch the market price in these troubled times, making a bail-out necessary.

Although brewing for a few months, the crisis finally erupted when on September 14, the company defaulted in payments of bank loans and interest, deposits and commercial paper obligations. Subsequently, it also failed to pay back inter-corporate deposits, leading to a ratings downgrade. It created panic in the financial markets.

The first task that the new board faces is to unravel the links of the maze of companies that the group controls. It also has to take stock of the assets on the books, some of which like the ones in the energy and transport sectors are almost duds, and evaluate them. Then, it will have to prepare a roadmap of how the issue will be resolved. The markets will have to prepare themselves for a long haul as all this cannot be done in a hurry.