IL&FS Engineering & Construction Co Ltd is a company in deep distress, operating under an NCLAT-mandated resolution framework with all credit facilities classified as NPAs. The record shows ₹3,080 crore of unrecognised interest, a standalone audit opinion that shifted to unqualified despite a persistent going-concern uncertainty, and over half of total assets tied up in impaired receivables and contract assets. Active SFIO and ED investigations continue, while the company carries a ₹703 crore arbitration award under appeal and a fully impaired ₹324 crore recovery suit.
Key findings
- The company has not recognised ₹3,080 crore of interest since October 2018, and all credit facilities are NPAs
Critical- The company has not recognised interest expense on borrowings since the NCLAT cut-off date of 15 October 2018, with aggregate unrecognised interest reaching ₹3,080.33 crore as at 31 March 2026. All credit facilities have been classified as Non-Performing Assets and recalled by lenders, and the company defaulted on every related-party loan tranche across seven consecutive financial years through FY2026. Fund-based borrowings stand at ₹2,627.67 crore, of which ₹2,047.07 crore are owed to promoter group entities. - The standalone audit opinion shifted to unqualified in FY23 despite a persistent going-concern uncertainty
Major- The standalone audit opinion was qualified in FY20, FY21, and FY22, then became unqualified from FY23 through FY26, even as the auditor included a Material Uncertainty Related to Going Concern paragraph every year. The consolidated audit opinion has been qualified every year from FY20 through FY26 due to non-consolidation of the overseas subsidiary Maytas Infra Saudi Arabia Company. CARO clauses on default in repayment and going concern have been reported as adverse every year from FY20 through FY26. - The company carries a ₹703 crore arbitration award under appeal, an impaired ₹324 crore ICD recovery suit, and material contingent liabilities
Major- An arbitration tribunal awarded Rs. 703.31 crore in favour of the company for a road project, but the contractee has appealed in the Hon'ble High Court of Delhi. Inter-corporate deposits of Rs. 323.78 crore claimed from Satyam Computer Services Ltd (now Tech Mahindra Ltd) have been fully impaired, and Commercial Suit No. 181/2022 has been filed for recovery. Contingent liabilities as of 31 March 2025 include corporate guarantees of Rs. 627.57 crore and performance obligation guarantees of Rs. 352.28 crore. - The company has suspended recognition of interest on borrowings since FY2019, accumulating ₹2,168.03 crore in unrecognised interest
Major- The company did not recognise interest expense of ₹445.82 crore in FY2024 and ₹437.41 crore in FY2023, citing the NCLAT Interim Order with a cut-off date of 15 October 2018. Aggregate unrecognised interest reached ₹2,168.03 crore as at 31 March 2024, up from ₹434.50 crore as at 31 March 2020. A deferred tax asset of ₹242.99 crore was retained by management despite an FY2020 audit qualification, then fully reversed as an exceptional item in FY2022 when the reasonable certainty threshold was not met.
What to watch
- Resolution bid approval. Approval of the resolution bid by Justice D.K. Jain (Retd.) and subsequent filing before NCLT, as disclosed in the FY2026 Annual Report signed 22 July 2026.
- ICD recovery suit. Outcome of Commercial Suit No. 181/2022 against Tech Mahindra for recovery of ₹323.78 crore, listed on 22 June 2026 for arguments on maintainability.
- Arbitration award appeal. Outcome of the Delhi High Court appeal by the contractee against the ₹703.31 crore arbitration award, as disclosed in the FY2025 Annual Report.
- SFIO and ED investigations. Completion of investigations by SFIO and Enforcement Directorate into the forensic audit findings submitted in May 2021.
- Going concern resolution. Resolution of the going concern uncertainty, contingent on finalisation and approval of the resolution process by NCLAT/NCLT; no scheduled date provided in the FY2026 Annual Report.
Bottom line: This is a company whose financial statements are shaped entirely by the NCLAT resolution framework: interest recognition is suspended, all credit facilities are NPAs, and net worth is fully eroded. The standalone audit opinion turned unqualified in FY23, but the going-concern uncertainty, the non-consolidation of a Saudi subsidiary, and the unresolved SFIO and ED investigations remain live. The asset side is dominated by impaired receivables and contract assets, while contingent liabilities and a ₹703 crore arbitration award under appeal sit off the balance sheet. Watch the resolution bid approval and the going concern resolution, the company's survival turns on them.