Saturday, July 20, 2013

ILFS Sued- The road to regional airports!

Neelam Mathews
July 20, 2013 

The government can cry itself hoarse over how it wants to develop its regional airport policy and even make announcements on how well the projects are doing, but it is clear that things are far from what they seem. Reality bites. Finally somebody had the gall to take legal action against an ineffective, inefficient, staid system.

Pushed to take legal recourse due to lack of response from JV partner and sister companies, promoters of Regional Airport-Holdings International Limited (RAHI), a joint-venture between Rahi Aviation Holdings Pvt. Ltd. (RAH) and IL&FS Transportation Networks Ltd announced that a series of legal actions had been initiated against IL&FS, ITNL, IL&FS Engineering (IECCL, earlier known as Maytas) and others, “in the wake of the Gulbarga and Shimoga Airport Projects languishing for want of appropriate responses from IL&FS.”

RAHI came in with dreams of building 99 airports and I can attest to the passion having met the founder many times. Its first two Projects at Gulbarga and Shimoga would have paved the way for a network of such Regional Airports. “Unfortunately, both these pioneering Projects have languished for over a year now, in the face of a deadlock created by the brazen display of corporate ego and associated institutional might of IL&FS and its group companies,” said Umesh Kumar Baveja, Chairman, RAHI.

Speak of a way to kill initiative! Congratulations India- we’ve done it once again!

This is what part of what RAHIs press release reads-

For over a year now, RAHI has endeavoured to keep the Projects alive in the face of serious impediments brought to it by ITNL (these, and many more breaches, are the subject matter of Complaints filed, and underway, against ITNL, their affiliates and functionaries).  ITNL has refused to participate in Board Meetings since February 2012, thereby blocking all attempts for RAHI to raise much needed capital to complete the Projects. ITNL has used its institutional relationships with Banks to even have the final Sanction of Debt for the Shimoga Project withdrawn. It further created an environment where Bankers to the Gulbarga Project suspended further disbursement of Debt.  But the most brazen act of all was ITNL’s collusion with their sister  Company IECCL to the serious detriment of RAHI. As a result of the aforesaid, Gulbarga Debt has now turned into a Non-Performing Asset (NPA) and its credit rating downgraded to Default grade (‘D’).  ITNL even sought to use the Bankers to usurp management control of Gulbarga, thereby, seeking to profit from their own wrongs. Similarly, ITNL attempted to profit from its investment in RAH, and through RAHI in Gulbarga and Shimoga; ITNL thrust an exorbitant loan at an interest rate of 17%, far higher than its own, stated cost of debt of 11.75%.  Baseless, unsubstantiated allegations against RAHI and its owners to third parties such as Banks and the Government of Karnataka were made with the sole aim of defaming them and eroding their business credibility.

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