The Hindu Business Line : IFCI net loss down at Rs 260 cr

INDUSTRIAL Finance Corporation of India Ltd (IFCI) has pruned its net loss to Rs 260 crore during the fiscal ended March 31, 2003, against a net loss of Rs 888 crore registered during the previous year.

In a release issued here today, IFCI has said the operational income for 2002-03 stood at Rs 1,403 crore, compared to Rs 2,219 crore during the previous year.

The term lending institution has said that the major reasons for the decline in operational income were reduction of business assets by around 11 per cent through prepayments and negotiated settlements, downward revision of interest rates in respect of certain major loan accounts in line with the overall decline in interest rates in the economy and reversal/non-recognition of income on fresh NPAs.

In view the fresh accretion of NPAs during the year, the provisions against bad assets for the year was increased to Rs 1,882 crore from Rs 631 crore for the previous year.

IFCI has said that it could make substantial savings in terms of borrowing costs during the year that declined from Rs 2,393 crore to Rs 1,558 crore due to restructuring of liabilities with major stake holders, including Government of India.

As a result of this restructuring, the average cost of borrowings has come down from 12.39 per cent to 9.29 per cent.

The institution has said that the Government has agreed to provide financial support by taking certain guaranteed and other liabilities and paying the interest differentials on certain SLR borrowings. IFCI has already received Rs 523 crore from the Government and an additional Rs 1,573 crore is expected soon.

The institution has requested to make available the financial support by way of grant to boost the capital base of the institution, especially the tier-one capital, which would improve capital adequacy.

The operating expenses, inclusive of staff expenses has come down to Rs 56 crore during the year 2002-03 from Rs 61 crore for the previous year because of various cost control measures adopted by the management.

IFCI has said that the borrowing cost is expected to come down further during the year 2003-04, with redemption of high cost family bonds, the approval for which has already been obtained from the bond-holders, as well as reduction of interest rates on PF and other retirement funds, which is under active consideration of EPFO.

The Institution is also making concerted efforts for restructuring of the balance liabilities to private banks, RRBs and corporate bodies.

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