Infrastructure Leasing & Financial Services Ltd (IL&FS), in the midst of a financial distress, has filed an expression of interest to buy its associate company Dighi Port Ltd (DPL), which is facing insolvency proceedings under India’s new bankruptcy law.
IL&FS, through its direct subsidiary IL&FS Maritime Infrastructure Co Ltd, holds a 39.38 per cent stake in Dighi Port Ltd, the entity that runs a greenfield port located on the banks of Rajpuri creek in Maharashtra’s Raigad district. Balaji Infra Projects Ltd is the main promoter of Dighi Port.
IL&FS Maritime holds another 29.90 per cent stake in Dighi Project Development Co Ltd, also an associate company.
The investment of IL&FS Maritime Infrastructure in the equity shares of Dighi Port Ltd is worth 297.458 crore as at March 31, 2018.
The carrying value of IL&FS investment in equity shares of Dighi Port is currently pegged at 207.1 crore and in the equity shares of Balaji Infra Projects Ltd (BIPL) is 50 crore.
IL&FS has also given loan to DPL on which the principal and interest due is 184.762 crore. The loan is secured by a pledge of 68.6 per cent equity shares of BIPL. The total direct and indirect exposure of IL&FS Group to Dighi Port is 532.220 crore.
IL&FS has recognised a cumulative impairment loss of 124.4 crore against its exposure in DPL and BIPL as on March 31, 2018.
IL&FS said that it is in the process of taking necessary steps to protect their equity interest and exposure in Dighi Port and hence the interest in the resolution process of the port.
“The company has also obtained opinion from legal expert to determine its eligibility to submit a resolution plan for DPL. The recovery of the value of equity shares of DPL will largely depend on the positive outcome of the business revival plan, resolution process of the NCLT and the additional infusion of equity capital,” IL&FS said in its annual report for 2017-18.
“IL&FS has submitted an EoI for Dighi Port along with a partner,” a person familiar with the NCLT proceedings told, asking not to be named.
IL&FS is competing with other contenders such as Adani Ports & SEZ Ltd, Jawaharlal Nehru Port Trust and JSW Infrastructure Ltd, for the deal.
IL&FS Maritime Infrastructure is eligible to participate in the bidding process for Dighi Port under India’s bankruptcy law because it is not a promoter of the company with majority stake who has defaulted on loans. Its eligibility, though, could be tested on the financial troubles facing its holding company.
IL&FS Maritime Infrastructure, which is 90.02 per cent owned by IL&FS, has submitted proof of claim as financial creditor in the bankruptcy proceedings of Dighi Port for claiming 206.3 crore. Its claim as financial creditor was admitted by the Interim Resolution Professional overseeing the insolvency process. IL&FS Maritime has also submitted claim for 7.4 crore as an operational creditor, out of which 4.3 crore claim was accepted and balance was under verification, the company said.
The Interim Resolution Professional has since been replaced by a Resolution Professional (RP) in accordance with an August 6 order of the Mumbai bench of NCLT.
The port started operations from two multi-purpose berths having a quay length of 650 metres. It is building three more multi-purpose cargo berths, of which one berth has been developed and the other two are under development.