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IFCI, a government company, has devised a multi-pronged turnaround strategy to tackle the current weak asset quality issues and strengthen its balance sheet, a top official said.
The strategy comprises focussed efforts to double cash recovery to ₹2,000 crore this fiscal, sale of investments in certain projects and realise ₹250 crore by selling non-core real-estate assets across the country, Emandi Sankara Rao, Managing Director & CEO, IFCI, told BusinessLine .
In 2017-18, IFCI made a cash recovery of ₹950 crore, just short of the targeted amount of ₹1,000 crore.
IFCI is also looking to unlock value of ₹70 crore this fiscal by selling its direct subsidiary IFIN (which has a presence in the NBFC and broking segments) to SHCIL (in which IFCI controls 52.86 per cent stake).
It may be recalled that IFCI had, in 2017-18, recorded a profit before provisioning of about ₹570 crore, but registered a net loss of ₹1,008 crore, largely due to huge provisioning for bad debts.
Rao, who has been at the helm of IFCI since August 2017, also said that IFCI was open to further sell its equity holding in the National Stock Exchange (NSE), the country’s largest bourse by profits. IFCI has direct equity stake of about 2.44 per cent in the NSE.
Higher disbursements
IFCI is also open to diluting its holding in Stock Holding Corporation of India (SHCIL) without losing control over the company, said Rao. For the current fiscal (2018-19), IFCI has set its sights on disbursements of about ₹6,000 crore, much higher than the ₹4,500 crore it disbursed in 2017-18 and about ₹3,000 crore in 2016-17, said Rao. “We have made a business plan which involves disbursement of ₹6,000 crore this fiscal. Of this, as much as ₹3,000 crore will be for new accounts,” said Rao.
In a change of tack on the asset portfolio side, IFCI has also decided to focus more on short-term loans while being selective on funding long-term projects.
“We don’t want to do long-term projects. We will do them selectively and in less number. Our focus now will be on short term lending. We will also enhance focus on fee based activity and offer structured products,” he said.
IFCI will focus on sunrise industries (electronics, renewables, and logistics) and certain brownfield projects.
“The idea is to ensure that the quality of assets that we are acquiring is A- and above. We provide tailor-made solutions,” he said.
Rao said that IFCI Venture Capital Funds Ltd (IVCF), a subsidiary of IFCI, will close three of its closed-ended funds (in aggregate ₹610 crore) and return money to investors this calendar year.
“We propose to start two new funds – Green Fund-II and Affordable Housing Fund – of ₹500 crore each. For Green Fund-II, we have all the approvals. We have to just do roadshows,” said Rao.
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