No instant fix to the IL&FS mess: Another $4.6-mn debt payment default

Infrastructure Leasing & Financial Services Ltd. is missing more debt obligations, even as the Indian government pledged to prevent further defaults, underscoring the challenges its new board faces in fixing the firm’s mounting debt problems.

IL&FS failed to service principal and interest on loans from banks, inter-corporate deposit and commercial papers totaling 339 million rupees ($4.6 million) due for the period from Sept. 30 to Oct. 4, it said in an exchange filing. The government earlier this week seized control of the conglomerate, which has total debt of $12.6 billion, ousting the erstwhile board of directors.

“This amount is peanuts in the big picture, that’s how bad the situation is at the group,” said Rajiv Kochhar, chief executive officer of Avista Advisory Partners in Singapore. “There is a huge mismatch in cash flows and people now have to manage their expectations in terms of the recovery prospect.”