The Company is a Core Investment Company registered with the Reserve Bank of India and is a holding company for diversified businesses in segments such as Transportation, Energy, Financial Services, Real Estate etc. Each of these businesses are conducted through various (direct and indirect) subsidiaries, joint venture entities, jointly controlled operations and associate companies both in India and in overseas jurisdictions (“IL&FS Group”).

The Company reported defaults on its borrowing obligations during the financial year 2018-19. Further, the credit rating of the Company was downgraded to ‘D’ (lowest grade) in September 2018.

Pursuant to a report filed by the Registrar of Companies, Mumbai ("RoC") under Section 208 of the Companies Act, 2013, the Ministry of Corporate Affairs (“MCA”) vide its Order dated September 30, 2018, directed that the affairs of the Company be investigated by the Serious Fraud Investigation Office ("SFIO"). SFIO commenced investigation of the affairs of the Company and submitted an interim report under Section 212(11) of the Companies Act, 2013, on November 30, 2018.

On October 01, 2018 Union of India (“UOI”) (acting through the MCA) filed a petition with Hon’ble NCLT seeking immediate suspension of the Board of Directors of the Company and appointment of a new Board of Directors, amongst others, on the grounds of mismanagement and compromise in corporate governance norms and risk management by the erstwhile Board of the Company and that the affairs of the Company being conducted in a manner prejudicial to the public interest. The Hon’ble NCLT vide its Order dated October 01, 2018 allowed the UOI’s petition and appointment of six new Directors to the Board of the Company on the recommendations of the UOI (collectively known as the “New Board”) being Mr. Uday Kotak, Mr. Vineet Nayyar, Mr. G N Bajpai (who subsequently resigned from the Board of the Company on October 30, 2018), Mr. G C Chaturvedi, Dr. Malini Shankar and Mr. Nand Kishore. The Hon’ble NCLT noted, that a governance and management change was required to bring back the IL&FS Group from financial collapse and in this regard, the New Board may attempt to restore the financial solvency of the IL&FS Group. Further, the Hon’ble NCLT vide its Order dated October 03, 2018 appointed of Mr. C S Rajan as a Director of the Company and vide its Order dated December 21, 2018 appointed Mr. Bijay Kumar and Mr. N Srinivasan also as Directors of the Company. Mr. CS Rajan, Mr. Bijay Kumar and Mr. N. Srinivasan form part of the New Board.

The New Board of Directors at its meeting held on October 04, 2018 elected Mr. Uday Kotak as the Non-Executive Chairman of the Company and Mr. Vineet Nayyar was appointed as the Vice Chairman & Managing Director of the Company. Further, the New Board at its meeting held on December 24, 2018 appointed Mr. Bijay Kumar as the Deputy Managing Director of the Company. Consequent to the appointment of Mr. C S Rajan as the Managing Director of the Company with effect from April 03, 2019, Mr. Vineet Nayyar holds the position of the Executive Vice Chairman of the Company.

Additionally, the Hon’ble NCLAT passed an Order on October 15, 2018 (the “Interim Order”) pursuant to which it stayed various proceedings and actions against the Company and its Group Companies (until further Orders). The Interim Order enabled value preservation of the IL&FS Group’s assets and provides time to the New Board to evaluate, prepare and implement a resolution plan for the Company and its group companies in an orderly manner, keeping in mind the interest of the various stakeholders.

The New Board has been working on the Resolution Plan of the IL&FS Group, which has multiple, complex and diverse entities under varied operating structures. At the time of its appointment, the New Board was directed by the Hon’ble NCLT to submit a roadmap for resolution of the IL&FS Group within a month and accordingly, the New Board submitted the First Progress Report to the MCA on October 30, 2018 (the “First Progress Report”) setting out the way forward for the IL&FS Group (which in turn was filed by the MCA with the Hon’ble NCLT on October 31, 2018). In the First Progress Report, the New Board, based on its initial assessment, amongst others outlined: (i) key challenges facing the IL&FS Group; and (ii) options which were and could be considered for resolution of the IL&FS Group.

Taking into account the various challenges facing the IL&FS Group, including the complexity posed by its structure, width of operating business, scale, group-wide levels of leverage, public interest, financial stability, legality, various stakeholder interests (including interests of the joint venture partners) and commercial feasibility, the New Board has put in place a resolution framework to have a timely resolution process, which is fair and transparent and incorporates well established legal principles and seeks to address concerns of all stakeholders of the IL&FS Group. The implementation of the resolution framework is presently under way and the Company has initiated the divestment processes in relation to various group entities. The Company being a Holding Company and registered as a Core Investment Company (CIC) with RBI, depends on its group entities to continue operating as a going concern.

The assessment of the New Board, based on analysis of the current position of and challenges facing the IL&FS group, is that an Asset Level Resolution Approach serves the best interest of all stakeholders to achieve final resolution. Additionally, NCLAT vide its orders dated February 04, 2019 and February 11, 2019 has directed the appointment of Hon’ble Justice DK Jain (Retd Justice of the Supreme Court of India) to supervise the resolution process for the IL&FS group.

In view of the resignations of Directors in a majority of your Company’s subsidiaries post October 01, 2018 and challenges faced in terms of appointment of Directors in those companies, members of the New Board have been appointed as Nominee Directors on Boards of major subsidiaries. The operations of other subsidiaries of your Company are managed through the appointment of senior officials of the IL&FS Group on their respective Boards with a view to have uniformity and co-ordination as part of actions towards the resolution of the IL&FS Group.

The New Board has submitted five Progress Reports from time to time to the Union of India who in turn has filed them with the NCLT. These Progress Reports are hosted on the Company’s website as well as on the website of BSE Limited.

The Company is classified as a "Red" entity, indicating that it is not able to meet all obligations (financial and operational) including payment obligations to its senior secured financial creditors. Accordingly, under the resolution mechanism, the Company is permitted to make only those payments necessary to maintain and preserve a going concern status.