AP State Financial Corp net up 30% to Rs 13.15cr

State-owned Andhra Pradesh State Financial Corporation (APSFC) posted a net profit of Rs 13.15 crore in the fiscal ended March 31, 2005, as compared to Rs 10.10 crore in the previous year, representing a growth of 30 per cent.

Its operating profit rose by 15 per cent to Rs 6.91 crore in 2004-05 from Rs 6.01 crore in 2003-04.

Addressing a press conference here on Tuesday, M Gopalakrishna, chairman of APSFC, said that the corporation stood first among all other state SFCs in terms of sanctions, disbursements and recovery percentage.

According to him, APSFC sanctioned new loans to the tune of Rs 463.99 crore in 2004-05 and made disbursements amounting to Rs 348 crore, which were 102.32 per cent and 99.65 per cent of the year's target respectively. Rajasthan followed with Rs 325 crore loan disbursements during the year.

The improvement in loan recoveries basically helped the corporation, once on the closure list, to turn around in the last four years from a position of making losses to the tune of Rs 13.13 crore during the year 2000-01 apart from implementing voluntary retirement scheme (VRS) among others.

However, APSFC's non performing assets (NPAs) are still at 22 per cent with around Rs 330 crore bad debts. The corporation's NPAs were nearly 55 per cent five years ago.

In a significant development, the state government has approved the request of APSFC for enhancement of authorised share capital from the present Rs 100 crore to Rs 500 crore. This move is expected to expand APSFC's share capital base, improve capital adequacy and borrowing capacity to undertake increased volume of business.

According to Gopalakrishna, food processing units stand first in terms of loan disbursements by APSFC followed by chemical and engineering units.

Though more than 50 per cent of loan disbursements being made by the corporation go to the smaller sectors, the average size of units being financed by APSFC is growing, he said.

"In the present scenario, only bigger units will meet the challenges arising out of the market competition as the customer has begun comparing the products of these units with that of foreign companies," Gopalakrishna said.

The corporation is still carrying high cost SLR bonds of Rs 184 crore with interest ranging between 9.90 per cent and 14 per cent as on March 31, 2005. It is pursuing with the bondholders to accept preredemption without premature premium, he said.