 "IFCI turns headless as MD, DMD finish stints")
Government-owned finance company IFCI has turned headless, with its managing director Malay Mukherjee and deputy managing director (DMD) Achal Kumar Gupta hanging up their boots on completion of their contract over the weekend.
As an interim step, the government has assigned the DMD post to Sanjeev Kaushik, deputy managing director of India Infrastructure Finance Company Ltd (IIFCL), IFCI executives said.
Besides the two directors, Sudhir Garg, executive director of IFCI, has also moved out after his contract ended last week. Mukherjee and Gupta had come on board on December 12, 2013, with a three-year contract.
The state-owned finance company is facing a vacuum at the top as it reels under a huge pool of non-performing assets (NPAs), which constitute 22 per cent of its loans. With the absence of leadership at the top, there are high risks of some borderline cases (weak but standard loans), slipping into defaults, executives said.
Ironically, on Friday (December 09, 2016), IFCI stock closed 16 per cent higher at Rs 27 per share on Bombay Stock Exchange.
IFCI posted a drop in net profit at Rs.14.86 crore in the second quarter (Q2) ended September 2016 from a net profit of Rs 182.61 crore Q2 of 2015-16. The operational income declined by 28% in the Q2 of the current year to Rs 763 crore from Rs 1,057 crore in Q2 of the previous year. This was due to the reversal of income in respect of fresh slippages, pre-payments and low credit offtake.
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Gross NPAs rose to 22.6 per cent at end of September 2016, up from 13.1 per cent in March 2016. The net NPAs were also rose to 18.4 per cent in September 2016 from 9.5 per cent at end of March 2016.
The downgrading of certain standard accounts on account of reduction in the loan portfolio due to prepayments and low credit offtake pushed the tally of bad loans. Its provision coverage ratio (PCR) declined to 46 per cent in September 2016 from 57 per cent in March 2016.