IL&FS reports standalone loss of Rs 13,275 crore in FY19

IL&FS Financial Services (IFIN) reported a net loss on a standalone basis of Rs 13,274.52 crore in the financial year 2018-19, compared with a profit of Rs 9.5 crore in the previous financial year.

The company’s exposure to non-performing assets, expressed as “Stage 3” assets, increased to Rs 12,429.64 crore, compared with an exposure of Rs 2,249.98 crore in FY18.

Total liabilities of the non-banking financial company fell 8.76% year-on-year to Rs 16,635.72 crore, while total assets in FY19 fell 79.5% to Rs 3,831.16 crore. As on March 31, 2019, IFIN’s total borrowings stood at Rs 8,866.32 crore, up 2.75% y-o-y. Cash and cash equivalents of the company rose 20% y-o-y in FY19 to Rs 964.90 crore.

IFIN’s total default amount as on March 31, 2019, stood at Rs 4,628.12 crore, excluding the interest liabilities post-October aggregating to Rs 392.09 crore. The government-appointed board of IL&FS has made a provision of Rs 11,358.54 crore on account of credit risk and impairment of investments, the company stated in its annual report.

The company started defaulting on debt obligations in August 2018, following which the government had in October 2018 suspended the erstwhile board of IL&FS group companies and replaced it with a another board led by Uday Kotak. The total debt obligations of the IL&FS group companies is close to Rs 1 lakh crore.

IFIN, which is registered as a non deposit non-banking finance company with the RBI, is required to maintain regulated Capital Adequacy Ratio (CRAR) of minimum 15%, with minimum Tier-I capital of 10%. Tier-I capital, also called “Net Owned Fund,” is the money used for the regular functioning of an NBFC and consists core capital, disclosed reserves and equity capital. IFIN’s capital adequacy ratio and net owned fund both turned to negative 520.29% as on March 31, 2019.

The auditor for IFIN, Mukund M Chitale & Co, raised material uncertainty related to the company’s ability to continue as a going concern and stated that IFIN.

“The company has breached its conditions for holding a certificate of registration as a non-banking finance company (NBFC), issued by the Reserve Bank of India… We are unable to comment on whether the company will be able to continue as a going concern,” said the report.

IFIN is currently under investigation by multiple authorities for financial irregularities. In October, the National Company Law Appellate Tribunal placed a moratorium on IL&FS group companies. IFIN has been classified as a “red” entity, meaning it cannot meet any debt obligations.

The company will hold an annual general meeting on December 31.