EXECUTIVE SUMMARY
The ‘Interim Report of IL&FS and Its Subsidiaries’ dated November 30, 2018 by the Serious Fraud Investigation Office (SFIO), which was submitted by the Ministry of Corporate Affairs (MCA) to the National Company Law Tribunal (NCLT), not only reveals the shenanigans of IL&FS’s senior management but also puts the spotlight on how the perpetual market favourite, HDFC, India’s premier mortgage financier and co-founder of IL&FS, managed to reduce its loss on its equity investment in IL&FS through financial engineering. The reduced loss, though, was at the cost of the other institutional lenders of IL&FS, who in effect compensated HDFC. While the SFIO is likely to question senior HDFC officials, possibly including current CEO Keki Mistry, for this transaction, HDFC shareholders may have a lower financial loss than originally estimated, thanks precisely to the transaction under investigation.
