The cash-strapped IFCI Ltd, which awaits capital infusion of Rs 1,000 crore, has net non-performing assets (NPAs) of Rs 3,937.06 crore as on March 31, 2001, according to its latest annual report.
The beleaguered institution has, however, targeted to bring down its NPAs by at least Rs 500 crore annually over the next three years. This is in keeping with the recommendations made by the expert committee under the chairmanship of D Basu, former chairman of State Bank of India.
Even as IFCI reduced its NPAs in absolute terms from Rs 4,102.56 crore as on March 31, 2000 to Rs 3,937.06 crore in 2000-01. However, in percentage terms, the net NPAs have risen marginally from 20.68 per cent to 20.99 per cent during the period under review. This follows additional NPAs accumulated during 2000-01, amounting to Rs 672.31 crore. After provisioning and write-offs of Rs 439.05 crore, the bad loans in absolute terms declined by 4 per cent to Rs 3,937.06 crore.
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The institution's balance sheet (8th annual report) has been heavily qualified by the auditors -- Lodha & Co and T R Chadha & Co. The auditors have expressed the view that IFCI's income has been overstated as recoveries in certain accounts have been made subsequent to the date of annual accounts. However, the amount could not be ascertained, the auditors have said.
Further, the auditors have questioned the recovery of advances to a project in the telecom sector, which IFCI has treated as 'standard assets.'
"The implementation of a project in the telecom service sector is faced with further delays on account of achieving financial closure, change in the government policy," the auditors said in their report.
The auditors also pointed out IFCI's non-conformity with the Reserve Bank of India (RBI) guidelines with regard to "sacrifice in cases restructured during the year, measured in present value terms." The central bank had come out with guidelines on March 28, 2001 permitting the restructuring of standard/sub-standard assets without the asset being downgraded, provided a suitable provision/write off is made in respect of the sacrifice. IFCI has sought clarification from the RBI on the methodology of calculation of sacrifice. "Pending this clarification, IFCI has neither computed nor provided for such sacrifice in these accounts", the auditors said.
IFCI intends to become "an active player in the secondary equity market subject to Sebi guidelines," the management said in its report to shareholders. However, even as IFCI increased investments during the year by Rs 358.4 crore, its investment portfolio depreciated by Rs 220 crore as the book value stood at Rs 662.8 crore against the market value of Rs 442.75 crore.