New Delhi: The government on Monday said that an investigation has been ordered into the affairs of the debt stricken IL&FS and its subsidiaries after “serious complaints” were received about the beleaguered company.
“There have also been serious complaints about some of the companies for which an SFIO (Serious Fraud Investigation Office) investigation has been ordered into the affairs of IL&FS and its subsidiaries,” the government said in a statement.
The statement comes after the Centre superseded the management of the beleaguered company by appointing a six-member Board led by banker Uday Kotak to restore the financial solvency of the debt-stricken conglomerate.
“The decision to supersede the existing board was taken after careful consideration of a report received from the Regional Director, Mumbai under the Ministry of Corporate Affairs (MCA) which clearly brought out serious corporate-related deficiencies in the IL&FS holding company and its subsidiaries,” the statement said.
According to the statement, it was noted that the consolidated financial statement of IL&FS holding company and its subsidiaries, associates and joint ventures projected a picture “through highly exaggerated depiction of non-current assets in the form of intangible assets amounting to over Rs 20,000 crore”.
“Besides, a bulk of revenue was in the form of receivables, around 50 per cent, which was locked up in litigation and arbitration,” the statement said.
“It has been noted that there is deep-rooted mismatch in the debt-equity ratio because of excessive leveraging, which has put a question mark in its ability to continue as a going concern if allowed to continue in the hands of the present management.”
“The high debt stress was clearly visible in the company and its main subsidiaries for the last so many years, but was camouflaged by misrepresentation of facts.”