IFCI plans to raise around Rs 1,000 crore from the market through a bond issue. After a gap of three years, the company is in the process of being rated which is necessary for the issue.
Speaking to Business Standard, IFCI Chairman and Managing Director Atul Kumar Rai said, “We are in the process of being rated. To get a rating from a rating agency, it is important to be making profit for three years.” IFCI turned around in 2006-07 after making profits of Rs 870 crore as against a loss of Rs 74 crore in 2005-06. Its profit rose to Rs 1,022.4 crore in 2007-08, but fell to Rs 662.84 crore in 2008-09.
“Raising any sum below Rs 1,000 crore may not be cost-effective,” he said adding that the issue size could be Rs 750 crore with a greenshoe option of another Rs 250 crore depending on the response.
On investment plans, he said the company would not be going for any big equity investment to the size of its recent buy of 5 per cent equity in the MCX Stock Exchange. “We may look at investing in assets valuing Rs 150-200 crore. If the deal flow is there and we need avenues for investment, then we may go in for such investments,” he added. The company though might continue to look at investment avenues beyond term-loan lending. According to Rai, term lending cannot pay the company’s cost of funds and they have to look at other avenues even though risky.
“The company’s capital structure and timing are two issues that have to be looked into before taking any decision,” he said. Rai said IFCI was creating fresh assets of Rs 3,000 crore after a gap of 10 years. Its non-performing assets stood at almost nil even as it is planning to raise fresh resources.