New Delhi: The SFIO has started investigations into the affairs of crisis-hit IL&FS and its subsidiaries amid concerns over financial irregularities, according to a senior official.
In a rare move, the government has superseded the board of IL&FS on Monday against the backdrop of debt defaults by some of its group entities that triggered fears of liquidity crunch.
The corporate affairs ministry, on whose petition the National Company Law Tribunal (NCLT) allowed superseding IL&FS board on Monday, has ordered the SFIO probe.
The official said the Serious Fraud Investigation Office (SFIO) has started the probe into affairs of IL&FS and its subsidiaries.
The agency has started gathering information and once the hypothesis is ready, then a decision would be taken into what all specific aspects need to be investigated, the official added.
IL&FS had 24 direct and 135 indirect subsidiaries in 2017-18.
In a release issued on Monday, the ministry said the decision to supersede the board was taken after considering a report from its Regional Director, Mumbai, that "clearly brought out serious corporate-related deficiencies in the IL&FS holding company and its subsidiaries".
"It was noted that the consolidated financial statement of IL&FS holding company and its subsidiaries, associates and joint ventures projected a picture through highly exaggerated depiction of non-current assets in the form of intangible assets amounting to over Rs 20,000 crore," it had said.
According to the ministry, there have also been serious complaints on some of the companies for which an SFIO investigation has been ordered.
Among other factors, the ministry said that due to excessive leveraging, there was "deep-rooted mismatch in the debt-equity ratio".
"The high debt stress was clearly visible in the company and its main subsidiaries for the last so many years, but was camouflaged by misrepresentation of facts. Besides, the fact that the company continued to pay dividends and huge managerial pay-outs regardless of looming liquidity crisis...," the release had said.
During financial year 2017-18, IL&FS had 169 group companies. Out of them, 24 were direct subsidiaries, 135 indirect subsidiaries, 6 joint ventures and 4 companies were associate companies, the ministry's petition filed before the NCLT had said.