The central government has turned the heat on the management of IFCI, a Delhi-based non-banking finance company, for poor performance in the third quarter of this financial year.
There has been a rise in bad loans and a dip in income. There were skippages of Rs 800 crore in seven cases, taking the total of gross non-performing assets to Rs 3,200 crore at the end of December 2012.
The government acquired 55 per cent stake through conversion of debentures in the company during the quarter ended December, and is mulling divestment. A senior finance ministry official said the performance has not been up to the mark in the quarter. The board of directors had a detailed discussion on bad loans.
B N Nayak, chief financial officer, said the economy’s slowing had impacted performance. Net profit dived to Rs 76.3 crore for the quarter ended December from Rs 114 crore in the same quarter of 2011-12. Total income fell to Rs 638 crore from Rs 673 crore.
The writeoff/provisioning for bad and doubtful assets ballooned to Rs 69.9 crore in the quarter against just Rs 62 lakh in October-December 2011.
Nayak said the institution had decided to go slow as the economic environment was not conducive for corporate financing. The assets were Rs 14,700 crore in December, down from Rs 16,600 crore a year before.
Also, the change in shareholding pattern during the quarter weighed on business strategy, said another IFCI official. It also faced the challenge of relatively high cost of funds compared to banks with access to low-cost deposits. Net interest margin declined to 2.18 per cent from 2.31 per cent a year before.
The finance ministry official said a plan had to be prepared for arresting slippage and to grow the business. Nayak said it was concentrating on recoveries and selling pledged shares. The balance sheet is expected to be stable, with improvement in asset quality.
Its shares closed 5.5 per cent higher today at Rs 32.5 on the Bombay Stock Exchange.
