IL&FS keeps an eye out for stressed assets

MUMBAI: Infrastructure developer and financier IL&FS is keeping a close eye on the auction of stressed assets for acquisitions to expand its portfolio as there are no projects coming up under the publicprivate partnership model, chief executive K Ramchand told ET.

He said that while the government’s decision to award more cash contracts is helping the industry keep afloat at a time when PPP projects and credit have dried up, the sector is struggling as it has huge dues with government agencies which are not paying up despite arbitration awards in many cases.

“It’s only the obstinacy of the government for not wanting to pay so easily. They don’t want to honour the arbitration award and go to court. If the work is done and the dispute mechanism process has proof that the work has been done, then the government should pay. If they just do that, it will ease the stress on the books of many companies,” Ramchand told ET.


IL&FS has about Rs 4,000 crore under arbitration in its transport business alone.

The government’s move to help cashstrapped infrastructure by allowing firms to get 75% of the arbitration award amount from the public sector customer against bank guarantees has not been very effective. “It is not easy to get bank guarantees.

If the companies were financially strong enough to get bank guarantees, there would have been no problem to begin with,” Ramchand explained.

As Infrastructure Leasing & Financial Services CEO, Ramchand, who is also managing director of IL&FS Transportation Networks, oversees all infrastructure projects within the group.

“We will look at the auction of stressed assets as it is a clear-cut mechanism. So far, renewable energy projects have not come on this platform, but they will and we will look at them too,” he said.

IL&FS derives 80% of its business from transport and energy projects. Ramchand said the company, which was among the first to plan raising funds through infrastructure investment trusts (InvITs) for its road projects, has deferred plans given the lacklustre performance of the two listed InvITs. The company is focussing on cash contracts in roads sector to keep the order book ticking.“Fortunately, our order book is healthy with revenue visibility for 2-3 years, so we are not stressed. For the past 5-6 years, banks have almost vacated infrastructure space, but this can’t be the case forever. Banks will start lending to the sector again and there will be PPP projects — when that happens, we will be back in the infrastructure development space,” Ramchand said.