IL&FS Investment Managers Reports Q1 Loss, Faces Ongoing Challenges
IL&FS Investment Managers Limited (IIML) reported a net loss of ₹22.69 lakhs in Q1, an improvement from the ₹334.07 lakhs loss in the same quarter last year. The company had no revenue from operations, with total revenue of ₹144.67 lakhs coming entirely from other income. Total expenses were ₹167.36 lakhs. IIML couldn't adopt consolidated results due to two subsidiaries not providing limited review results. Auditors issued a qualified conclusion, citing ongoing SFIO investigation. IL&FS has invited EoIs for the sale of its entire stake in IIML.
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IL&FS Investment Managers Limited (IIML) has reported its unaudited standalone financial results for the first quarter, revealing ongoing challenges for the private equity firm.
Financial Performance
IIML posted a net loss of ₹22.69 lakhs for the quarter. This marks a significant improvement from the loss of ₹334.07 lakhs reported in the same quarter of the previous year. However, the company failed to generate any revenue from operations during the quarter.
The company's total revenue stood at ₹144.67 lakhs, entirely comprising other income, which included fair value gains on investments. This represents a substantial increase from the ₹96.88 lakhs total revenue reported in the corresponding quarter of the previous year.
Expenses and Operational Challenges
Despite the lack of operational revenue, IIML incurred total expenses of ₹167.36 lakhs during the quarter. The major components of these expenses were:
| Expense Category | Amount (₹ lakhs) |
|---|---|
| Employee benefits | 87.75 |
| Rent | 27.02 |
| Legal and Professional | 29.06 |
The company's inability to generate fee income during the quarter underscores the challenges it faces as most of its existing managed/advised funds approach the end of their extended terms.
Consolidated Results and Subsidiary Issues
IIML was unable to adopt consolidated results for the quarter due to two of its subsidiaries, Andhra Pradesh Urban Infrastructure Asset Management Limited (APUIAML) and IL&FS Investment Advisors LLC, failing to provide their limited review results. This situation highlights potential governance and reporting issues within the IL&FS group.
Auditor's Observations
The company's auditors, KKC & Associates LLP, issued a qualified conclusion in their limited review report. They cited the ongoing investigation by the Serious Fraud Investigation Office (SFIO) against Infrastructure Leasing & Financial Services Limited (IL&FS) and its subsidiaries, including IIML, as a basis for their qualification. The auditors were unable to comment on the potential impacts of this investigation on the company's financial results.
Going Concern and Future Outlook
The auditors emphasized the material uncertainty regarding IIML's ability to continue as a going concern. This uncertainty stems from the significant reduction in the company's fee revenue and the lack of immediate new fund raises. However, the management believes that the company's estimated earnings and liquid assets will be sufficient to meet its obligations over the next 12 months.
Corporate Actions and Potential Sale
In a significant development, IL&FS, the parent company, invited public Expressions of Interest (EoI) for the sale of its entire stake in IIML on December 21, 2023. The company reported that several prospective bidders have shown interest, and the process is currently underway.
As IIML navigates through these challenging times, the potential sale of IL&FS's stake and the outcome of the SFIO investigation remain critical factors that could shape the company's future trajectory in the private equity and asset management space.
Historical Stock Returns for IL&FS Investment Managers
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.74% | +0.62% | -8.04% | -10.38% | -32.22% | +119.46% |
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