New Delhi: A day after the government superseded the IL&FS board, former independent directors of the crisis-ridden group wrote to new Chairman Uday Kotak, extending their “complete support" in the revival of the entity.

Five directors, including former Chairman S.B. Mathur, in a letter, also mentioned about IL&FS being unable to raise additional equity despite several attempts and the “asset-liability" mismatch that continued to aggravate.

Other independent directors are R.C. Bhargava, Michael Pinto, Jaithirth Rao and Rina Kamath.

While assuring their “complete support", the independent directors said the government’s action was the correct one, since it would help in reaching out to various counter parties, including debtors and creditors of IL&FS, from a position of strength and clarity.

“Despite several attempts during our tenure, IL&FS was unable to raise additional equity directly or at the level of its subsidiaries. It was also unable to complete a merger with a strategic party," the letter said.

“With its mounting counter-party receivables, the need to continue with existing projects and the absence of long-term financial support in the markets, the asset-liability mismatch continued to aggravate almost inexorably... we believe that this structural conundrum needs to addressed for all infrastructure financing in the country," according to the letter.

The government on Monday said a new board was a necessary first step towards restoring the confidence of the financial market in the IL&FS Group. Defaults by some IL&FS group entities had triggered concerns of liquidity crisis in the financial markets.

Also read: Govt pledges liquidity support to IL&FS group

The turnaround efforts would be steered by Kotak as non-executive chairman. A noted banker, he is seen as a ‘go to man’ and a key person in pushing reforms in corporate governance practices. The Kotak-led panel on corporate governance, appointed by the Securities and Exchange Board of India (Sebi), came out with sweeping reform measures for stronger corporate governance practices and most of the suggestions, including those pertaining to splitting of the post of chairman and managing director at listed companies, have been accepted.

On Monday, the National Company Law Tribunal (NCLT) cleared the names of six individuals, including Uday Kotak, to be appointed as directors on the board of IL&FS. Kotak would be non-executive chairman. Five other directors include Vineet Nayyar, G.N. Bajpai, G.C. Chaturvedi, Malini Shankar and Nand Kishore.

According to IL&FS’ latest balance sheet, infrastructure and financial assets worth over 1,15,000 crore are currently facing tremendous debt pressure. The company is struggling to service around 91,000 crore debt.

Also read: Opinion | India dodges a Lehman moment. That was the easy part

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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