IL&FS Financial Services (IFIN) on Thursday reported a standalone net profit of Rs 188.77 crore in the financial year ended March 2020.

It had posted a net loss of Rs 13,274.53 crore in 2018-19 — also the year when the company defaulted on payments and management woes came to light. The company is part of the IL&FS group whose board was superseded by the government in 2018 following a payment crisis.

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In the last fiscal, IFIN’s total income increased to Rs 387.33 crore as against Rs 297.10 crore in 2018-19, the company said in a filing.

The financial results for the year ended March 31, 2020 have been reviewed by the audit committee and approved by the board of directors of at their meeting held on December 5, 2020, as per the filing.

Apart from default in payment obligations, IFIN’s credit rating was downgraded to the lowest level in 2018-19.

According to IFIN, going concern assumption was used for preparation of the financial statement even as the company and the group in general are undergoing financial stress as at March 31, 2020.

“The ability of the company to continue as a going concern is predicated upon its ability to monetise its assets, and restructure/ settle its liabilities. In view of actions that are currently underway, the accompanying financial statements have been prepared on going concern basis based on cumulative impact of certain steps taken by the new board of IL&FS,” the filing said.

The company has net liabilities of Rs 16,667.60 crore as of March 2020 and is in breach of its conditions for holding a certificate of registration as an NBFC issued by the Reserve Bank.

Thus, company’s ability to raise funds has been substantially impaired with normal business operations being substantially curtailed, the filing said.

Further the company has also undertaken analysis of recovery from its borrowers (including IL&FS Group entities which are under sale process) vis-a-vis provision held by the company.

IFIN has also approved a policy on granting COVID-19 relief to eligible borrowers with certain conditions.

About the impact of the COVID-19 pandemic, the company said it has been under default since September 2018 and is under moratorium. Hence, no impact is seen on the ability of the company to meet its liability in next 12 months .

In September 2018, the government ordered an SFIO probe into the affairs of IL&FS and its subsidiaries. In October the same year, the National Company Law Tribunal (NCLT) suspended the erstwhile board of IL&FS amid the financial turmoil.

On the resolution process proposed by the new board of directors of IL&FS, the company said it has submitted several progress reports and updates to the NCLT.

“The new board of IL&FS is pursuing vertical level, SPV (Special Purpose Vehicle) level and asset level resolution plan. The assessment of the new board of IL&FS, based on analysis of the current position of and challenges facing the IL&FS group, is that an asset level resolution approach serves the best interest of all stakeholders to achieve final resolution.

“Further, the stakeholders’ interests will be protected adequately since the framework and asset sale will be subject to NCLAT approval. The board of IL&FS has submitted various progress reports and updates to the NCLT and NCLAT on the resolution plans and latest of which was submitted on January 9, 2020,” the filing said.

On claims management and reconciliation of claims received, IFIN said amounts claimed by the financial and operational creditors are assessed for admission by the Claims Management Advisor (CMA).

“Based on the reconciliation done by the company till date with the claims admitted by the CMA, the amount of total claims received and admitted of Rs 16,383.17 crore in respect of the company as at October 15, 2018,” it said.

Among others, IFIN said it is assessing various legal cases and suits which were filed against it following the default of borrowings that started in September 2018.

Recovery of some loans during 2019-20 resulted in release of provision for impairment of Rs 163.70 crore, it added.

“The company has recognised further impairment in respect of outstanding loans as on March 31, 2020 amounting to Rs 195.23 crore and the same has been netted off against the amount mentioned,” it said.

Regarding probes by SFIO and other regulatory agencies, IFIN said SFIO has been seeking information from the company on an ongoing basis.

“The investigation is in progress and the company is fully cooperating with the investigating agencies. Further, various other regulatory and law enforcement agencies including the Enforcement Directorate (ED) have initiated investigations against the company.

“SFIO and Enforcement Directorate have served their reports to the company. The implications, if any, arising from these developments would be known only after the aforesaid matters are concluded and hence are not determinable at this stage,” the company said.