Date:01/06/2004 URL: http://www.thehindubusinessline.com/2004/06/01/stories/2004060101171900.htm

Back APSFC records 4-fold rise in profits

Our Bureau

Hyderabad, May 31

THE Andhra Pradesh State Financial Corporation (APSFC) has registered a net profit of Rs 10.10 crore in 2003-04 as against Rs 2.36 crore in the previous fiscal.

The corporation, which had recorded a four-fold increase in net profit, has also achieved the highest ever recovery of Rs 451 crore last fiscal.

According to APSFC Chairman, Mr M. Gopalakrishna, and Managing Director, Mr Ratan P. Watal, the corporation, in concurrence with Andhra Pradesh Government, has entered into a tripartite memorandum of understanding with the Small Industries Development Bank of India (SIDBI) in November 2003. Under the MoU, SIDBI has reduced the lending rates on the refinance loans borrowed by APSFC by 2 per cent and also restructured the corporation loans up to 10 years.

They said that the MoU had given new impetus to the turn-around process of APSFC and helped it to reduce borrowing cost, improve capital efficiency and overall profitability. The corporation's cost of funds now decreased to 10.5 per cent from 12-13 per cent earlier. Accordingly, the average interest charged by the corporation had also declined to just over 11 per cent from 14 per cent.

Mr Gopalakrishna told newspersons here on Monday that the strategy of the corporation to maintain and improve asset quality enabled it to write off non-performing assets (NPAs) to the tune of Rs 4.43 crore last year. Reduction in NPAs had also contributed to the increase in net profit of APSFC. Last fiscal, the operating profit per employee rose from Rs 68,000 to Rs 1.13 lakh while the net profit per employee increased from 43,000 to Rs 1.89 lakh.

He said during 2003-04 the corporation had surpassed the targets set in its business plan with regard to sanctions, disbursements and recovery. Against a target of Rs 419 crore, APSFC had sanctioned Rs 431 crore. Similarly, against a target of Rs 275 crore, an amount of Rs 283 crore was disbursed while the recovery amount stood at Rs 451 crore as against a target of Rs 430 crore.

Stating that APSFC was among the commercial banks and SFCs selected for operating the Rs 10,000-crore Small and Medium Enterprises Fund, Mr Gopalakrishna said that the corporation would focus on financing industries pertaining to drugs and pharmaceuticals, agro processing, exports, tourism, infrastructure, hospitals, construction and bio-technology.

Replying to a question, he said that about 300 industrial units financed by APSFC have gone out of its fold as they have developed into major industries. On the other hand, about 1,600 units, which have taken loans from APSFC, have turned sick.