Aditya Birla debt mutual funds to gain as IL&FS arm to pay back creditors

Some debt schemes of Aditya Birla Sun Life Mutual Fund, which held investments in Jharkhand Road Projects Implementation Company Limited (JRPICL), stand to gain as cash flows from JRPICL will begin as the company begins servicing both principal and interest.

JRPICL, one of the three group entities of debt-laden Infrastructure Leasing & Financial Services (IL&FS), is set to begin servicing its debt obligations after lenders and IL&FS reached agreements to restructure debt, according to submissions before an appellate tribunal.

Aditya Birla Sun Life Mutual Fund has an exposure of ₹950 crore to this company. A binding term sheet signed between IL&FS and creditors of JRPICL moves it from amber to green.


“It is a big move for us as assets in which everyone was concerned is now becoming a good asset. Secondly, servicing of both principal and interest will begin,” said A Balasubramaniam, CEO, Aditya Birla Sun Life Mutual Fund.

He said this is a big order to ensure ring-fenced assets are made to work the way they are meant.

“It is a positive development,” said Vikram Dalal, managing director, Synergee Capital. “Since October 2018, all the financial and operational creditors are waiting for some concrete resolution plan. And now they see some ray of hope from NCLAT (National Company Law Appellate Tribunal) and from the new management. Potential buyers are showing interest in acquiring productive assets of IL&FS subsidiaries. The mutual funds will get their outstanding dues if they have invested in those specific subsidiaries or SPVs (special purpose vehicles).”

Earlier, IL&FS cited a court order by the NCLAT while claiming that its SPVs were entitled to a moratorium on repayments. Aditya Birla Sun Life Mutual Fund had marked down its investments by 25% in various debt oriented schemes and fixed maturity plans where it held this investment.