A complete revamp of the IFCI board has begun with as many as four of the eight independent directors resigning from the 12-member board.
The four independent directors who have resigned are: Vijendra Singh Jafa, Shohbit Mahajan, Shabbeer Pasha and Atul Ashok Galande.
The large-scale resignations of independent directors follow the Government taking control of this systemically important non-banking finance company (NBFC) from December 21 last year.
However, there is uncertainty about the role of Atul Rai, who is the current CEO and Managing Director in the revamped board.
It is not clear whether the Government, as the majority shareholder (55.6 per cent), is only going in for a board revamp or will also undertake a management overhaul.
In an interesting move, the Government has replaced two of its existing nominees — Sanjeev Kumar Jindal and V. K. Chopra — with another nominee Anurag Jain, a Joint Secretary in the Department of Financial Services.
On December 21, the IFCI board’s share allotment committee approved the conversion of optionally convertible debentures (OCDs) worth Rs 523 crore issued to the Government into equity shares at par.
With the already issued unsecured debentures of Rs 400 crore having been converted into equity at par, the Government had raised its stake to 55.6 per cent, effective December 21 last year.
Prior to IFCI becoming a Government company on December 21 last, its board had 12 members, including two Government nominees, eight independent directors and one LIC nominee, besides Rai.
Critics say that the Government has moved very late in the day in taking control of IFCI .
But the stock market cheered the board revamp move, with the IFCI share rallying 12.12 per cent to close at Rs 38.40 on Friday.
Some of them also saw the developments at IFCI as a prelude to the NBFC being granted a banking licence soon.