The IL&FS group is facing serious liquidity crisis and has defaulted on interest payments on various debt repayments since 27 August.Reuters

In the latest development related to the beleaguered Infrastructure Leasing & Financial Services Limited (IL&FS), the former directors who were sacked by the government on Friday, have defended their role. The fired directors have said that they were aware of the imminent financial crises for two to three years.

Business Standard reported that according to ex-directors, they did push for alternative options like selling the company, hawking some of its assets, and an initial public offering but all these proposed plans could be taken forward due to reluctance from the nominee directors.

"We, together with the management, had pushed for many solutions as it became clear that banks will no longer refinance 10-year loans for a similar tenure, which was being done to finance long-gestation infrastructure projects. Therefore, the company was forced to take short-term debt to complete some of the ongoing projects and to pay its interest, which was not sustainable," one of the ex-directors said.

The director also argued that the nominee directors of the shareholders "not only did not endorse our suggestions of raising capital but did not come up with an alternative solution either, though they represented large financial institutions".

Highlighting some of the crucial attempts by the independent directors he informed that an offer was made by Ajay Piramal to buy ILF&S at a price Rs. 600-650 per share. But the proposal was turned down by the Life Insurance Corporation (LIC) as its independent valuation pegged the price per share at Rs 1,200. The idea of floating Initial Public offering (IPO) was also not followed up and monetization of assets was not carried out quickly.

Meanwhile, one of the executives of the largest insurer of the country ridiculed the allegations made by the ex-director. "LIC representatives on the board have been open to business proposals, including asset monetization, in the past three years. While exercising fiduciary responsibility as an investor, the institution expects transparency and high-quality corporate governance from the management at IL&FS. Very little happened in terms of asset monetisation," he said.

IL&FS, which is one of the largest Non-Banking Financial Cooperation (NBFCs), is facing a huge liquidity crisis and have defaulted on their loans multiple times in the recent past.