New Delhi: Shares of IL&FS Transportation Network rose by over 15 percent to Rs 26.50 after the government sought to control of its parent by replacing all board members.
The government moved National Company Law Tribunal (NCLT) on Monday, looking to take over debt-ridden IL&FS by dissolving the entire board and appointing ten new directors with Kotak Mahindra Bank boss Uday Kotak as the non-executive chairman.
The government claimed that the directors have failed to discharge their duties.
The government is looking to supersede the IL&FS board, banking sources said, adding the foreign shareholders are hesitant in putting more money unless there is a change in the management.
The domestic shareholders have also expressed their concerns in lending to the same management at the helm, the sources said.
Sources from the company said IL&FS will support and co-operate with the government and the NCLT application will help the company in an early resolution of its pending issues.
The government had told the law tribunal that many mutual funds will collapse if IL&FS collapses and the company has been showing a rosy picture of its balance sheet.
The company's counsel told the law tribunal that the government has to form an objective opinion in the case.
A similar sort of situation had played out at the time of Satyam crisis during the UPA term.
The IL&FS group is facing a serious liquidity crisis and has defaulted on interest payment on various debt repayments since August 27.
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