Institutional stakeholders have vowed to subscribe to Industrial Finance Corporation of India's (IFCI) Rs 352-crore rights issue that opens on December 23, indicated IFCI chairman, P V Narasimhan. Financial institutions led by Industrial Development Bank of India (IDBI) control nearly 60 per cent of the FI's stake.
Narasimhan told reporters that IFCI's future looks good as the financial institution has embarked on a restructuring of non-performing assets (NPAs) and is also moving towards having 25 per cent of its business portfolio at the shorter end of the market in three years time.
The strategy would give dividends in couple of years, the IFCI chief said.
IFCI hopes to bring down NPAs by about Rs 300 crore in 1999-2000.
"We have indicated to all our institutional investors about the rights issue well in advance and they have vowed to fully subscribe their rights," Narasimhan said at a press conference.
Currently, financial institutions like IDBI, Life Insurance Corporation (LIC), General Insurance Corporation (GIC), Unit Trust of India (UTI), along with other banks, hold 60.72 per cent in the company, the rest being held by the public and other corporate bodies.
The issue has not been underwritten following the support shown by the FIs.
The issue closes January 21, 2000.
There has been a continuous decline in IFCI's financial performance, the company's net profit declining to Rs 23.5 crore in 1998-99 from Rs 370.5 crore in 1997-98. But profits are projected to grow five folds in the current fiscal to Rs 131.6 crore.
Meanwhile, IFCI is planning 'strategic' investments in the newly opened up insurance sector.
One of the options being contemplated is tying up a triangular arrangement with a foreign insurance firm and a commercial bank to make a foray into investing in the insurance sector.
IFCI is tracking the interests of global insurance majors and weighing the option of whether to invest in the life or general insurance category. However, any plans of investing in the sector was subject to guidelines being laid down by the IRDA
