As IL&FS crisis deepens, here are top 10 developments in the unfolding saga

The focus now is on the Reserve Bank of India's (RBI) summons to IL&FS shareholders for a meeting on Friday

Infrastructure Leasing & Financial Services Ltd (IL&FS) and its subsidiaries are strapped for cash and have missed debt repayments, making investors and the credit markets jittery. Over the past three years, IL&FS’ total debt has jumped 44 per cent — to Rs 910.913 billion at the end of March 2018 from Rs 631.14 billion at the end of March 2015. There have been assurances of liquidity support and capital infusion, but in the absence of any concrete action so far, investors have started doubting the promises. The focus now is on the Reserve Bank of India's (RBI's) summons to IL&FS shareholders for a meeting on Friday.

Here are are the latest developments in the unfolding saga of the Infrastructure Leasing & Financial Services Ltd (IL&FS):

1. Govt seeks to calm markets

The government sought to calm markets on Monday and said it would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds. Finance Minister Arun Jaitley tweeted that "the government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs," referring to the non-banking financial companies. Jaitley's assurance came after the shares of housing finance companies came under a sudden heavy selling pressure on Friday amid crisis at IL&FS.

2. Sebi wants rating agencies to take cues from markets

Caught offhand by the downgrades of IL&FS debt paper — from triple-A to ‘D in less than two months, market regulator Sebi asked rating agencies to take cues from market in evaluating bond issuers. According to the Economics Times, the move assumes significance with the financial market currently displaying a sudden risk aversion to debt securities of businesses like non-banking finance companies, whose importance and valuation had risen in the past two years as banks shirked lending to manufacturers and often chose to lend to NBFCs.

3. Sidbi to file case against IL&FS for non-payment of deposits

Sources said, IL&FS owed a total of Rs 10 billion to Sidbi. Of the total, the defaulter has paid back only Rs 500 million. The way things are, it feels that legal route is the best one for recovery,” a person familiar with the development told CNBC. The case could be filed as early as Wednesday, CNBC said in a report.

4. IL&FS seeks NCLT relief

IL&FS had filed an application with the Mumbai Bench of the National Company Law Tribunal (NCLT) seeking certain relief in connection with the filing of scheme of arrangement under Section 230 of the Companies Act, the infrastructure financier informed stock exchanges on Tuesday.

The scheme of arrangement pertains to IL&FS and 40 other group companies, and it would be prepared in compliance with applicable law and subject to necessary approval from shareholders, creditors and boards of directors of the entities concerned, IL&FS said in a statement.

The firm may also approach NCLT with a plea that a bankruptcy case against the group should not be admitted. The company will inform the tribunal that the group is already in the process of settling its dues through monetisation of IL&FS assets and through other capital-raising programmes.

IL&FS has appointed Cyril Amarchand Mangaldas as the counsel to approach the tribunal.

5. IL&FS Transportation Network to get Rs 4.25 bn compensation from NHAI

State-run NHAI would pay IL&FS Transportation Network a compensation of Rs 4.25 billion for losses suffered by the latter due to cost overrun in a project in Uttar Pradesh. NHAI and IL&FS Transportation Networks have reached a settlement over various claims filed against NHAI in relation to the project.

6. IL&FS plans to sell 25 assets to raise Rs 300 billion

IL&FS held a meeting on Monday to strategise how to bring the troubled company back on track. The company is staring at a mismatch between loan repayments worth Rs 250 billion in the next one year and sagging cash flows. The group’s management is planning to sell 25 assets worth Rs 300 billion and raise an additional Rs 45 billion by way of a rights issue at Rs 150 a share.

However, given its dismal track record, some experts now question the 14-member board’s ability to sell the stake in the financial services unit and whether it would be enough to steer IL&FS out of crisis.

About 25,000 companies are rated in India, of which half are estimated to be below investment grade.

7. IL&FS must resolve issue on its own, says Subhash Garg

Economic Affairs Secretary Subhash Chandra Garg said "IL&FS is independent of government. It has independent board and shareholders. So, IL&FS needs to resolve its issues on its own and I think it is capable of doing it". 

"It has assets, it has liabilities to take care. There might be some temporary mismatch, so it is IL&FS, which will deal with the problem. The government is not involved directly," Garg said.

8. Japan’s Orix may acquire majority stake in IL&FS

Orix Corporation of Japan, which owns a 23.54 per cent stake in crisis-hit IL&FS, is keen to acquire a majority stake in the infrastructure development and finance company.

9. Shares fall on account of IL&FS default on Monday

The Sensex's fall to a two-month low came amid debt market liquidity worries triggered by the IL&FS default earlier this month. Concerns about the health of NBFCs following the default were compounded on Friday by market reports that DSP Mutual Fund sold non-convertible debentures of Dewan Housing at a much higher yield than what was prevalent at that time. The reports triggered a broad selloff in shares of NBFC's on Friday, with DHFL at one point falling by as much as 60 per cent.

10. RBI to meet with shareholders of IL&FS

RBI has called for a meeting with shareholders of IL&FS Ltd on September 28. According to Bloomberg, the meeting would be chaired by a deputy governor of the RBI and will focus on the recent set of defaults reported at IL&FS and its subsidiaries. On the agenda is also a discussion on a capital infusion plan that the shareholders will take up on September 29 at an annual general meeting of the company.