IL&FS To Slash 65% Jobs To Rescue Group
The government-appointed board at the insolvent Infrastructure Leasing & Financial Services Ltd. plans to slash two-thirds of the jobs across the group as it aims to revive the systematically important conglomerate.
The cost cuts initiated by billionaire banker Uday Kotak-led board will lower manpower by 65 percent and reduce its Rs 1,066-crore wage bill by half, according to the company's exchange filing. The group will also cut salaries and discontinue consultancy services of retired employees, helping it save another Rs 100 crore a year.
While IL&FS hasn't publicly disclosed the size of its workforce, a person aware of the matter said on the condition of anonymity that the group employs about 4,500 people.
Most of the IL&FS subsidiaries do not generate enough cash to sustain operations. The new board, which took over as the government tried to prevent a contagion in the financial markets, is looking at asset sales, capital infusion and cost cuts to rescue the group which has a debt of about Rs 91,000 crore.
Other Cost Reduction
IL&FS terminated guest houses leased by various entities within the group, saving nearly Rs 7.3 crore, according to the filing. It closed offices at various locations, lowering costs by Rs 4.9 crore a year.
The company plans to lease out office premises at IL&FS Financial Services Centre from February next year. That's expected to bring in Rs 13.5 crore in rentals and Rs 6.7 crore in security deposits. It's also exploring proposals to sell cars, non-core assets and some of the offices.
Going Concern Issues
The board had named Alvarez and Marsal India Pvt. Ltd. to assist in developing a resolution plan. The adviser is focusing mainly on:
- Assessing the need for cash to keep the companies afloat.
- Examining resolution on options for each entity.
- Develop a 13-week plan to optimise cash flows.
The new board, after taking over the group, had found it to be far more complex than expected with 348 associates and subsidiaries. So far, it has reviewed 165 of the 348 companies and found that close to 100 will face cash crunch till March 2019.
Among the entities facing operational cash flow issues are:
- Infrastructure Leasing & Financial Services Ltd.
- IL&FS Transportation Networks Ltd. and its subsidiaries.
- Elsamex (India) Pvt. Ltd.
- IL&FS Energy Development Company Ltd. (the holding company for the energy vertical)
- IL&FS Engineering & Construction Company Ltd.
- IL&FS Environmental Infrastructure & Services Ltd. and several of its subsidiaries.
- IL&FS Skill Development Corporation Ltd.
- IL&FS Technologies Ltd. (holding company)
- IL&FS Township & Urban Assets Ltd.
- IL&FS Maritime Infrastructure Company Ltd.
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