India Infrastructure Finance Company Ltd’s London arm is targeting fresh disbursements of $1 billion in 2013-14, its Chairman S. K. Goel said here on Monday.

This is more than the $975 million cumulatively disbursed by the London subsidiary since its inception in 2008.

Goel said that the current fiscal’s disbursement target is achievable as the Government has now enabled private sector projects to get more funds from IIFC (UK), which is the wholly-owned subsidiary of IIFCL.

The Finance Ministry has now approved the limit of 50 per cent for lending to private infrastructure projects (non-PPP projects).

The remaining 50 per cent of lendable resources will have to go to public private partnership (PPP) projects.

This new regime has come into effect from April 1 and is not for any specified time period.

“Pegging the limit for private projects at 50 per cent would enable a larger number of private infrastructure projects to get foreign currency financing from IIFC (UK) for import of capital goods,” Goel said.

Prior to April 1, there was no ceiling on the quantum of resources the London subsidiary could lend to private projects in an accounting year.

An earlier ceiling (of 20 per cent) was removed in January after the Government did away with the 80:20 rule.

But this free hand was available to the London arm only till March 31 this year. This flexibility had encouraged the IIFCL’s London arm to ramp up sanctions.

Gross sanctions for the UK subsidiary as on March 31, 2013, stood at $5.6 billion.

The demand from PPP projects for the London subsidiary’s funding assistance has not been all that inspiring in recent years.

Of the 56 proposals that came to IIFC (UK) in the last two years, only 12 were PPP and the rest were private projects, Goel had said recently.

The London subsidiary was set up in 2008 to provide foreign currency loans to Indian infrastructure project developers, who could avail themselves of loans to import capital equipment.

Bullish on profits

IIFCL is set to register a net profit of Rs 1,000 crore for the financial year ended March 31, 2013, according to Goel.

This will represent a 47 per cent jump over the net profit of Rs 678 crore recorded in the previous fiscal.

This quantum jump in profits has come because of better utilisation of resources, Goel, who is Chairman and Managing Director of IIFCL, said.

Encouraged by this performance, Goel said IIFCL was now aiming at net profit growth of 40 per cent in fiscal 2013-14.

“As much as 91 per cent of our lendable resources is now deployed in infrastructure projects. I have now started earning (up to 91 per cent) from this deployment. That is helping me make more profits,” Goel said.

Also, factors such as maintaining a lean staff has helped improve the bottom-line.

“The net profit growth is both revenue and cost led. One way revenue has increased. On the other hand, costs have come down. Both factors have contributed for the quantum growth in net profit.”

For the current fiscal, IIFCL is looking to raise Rs 10,000-12,000 crore as against around Rs 7,000 crore in 2012-13.

(This article was published on April 8, 2013)
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