IFCI will receive the Rs 400 crore budgetary support announced by the government within the next 10 days, said senior finance ministry officials. The supplementary demand for grants, which had provided the amount, was passed by Parliament today.
Meanwhile, P V Narasimham, chairman, IFCI said the institution expected its shareholders to chip in with the balance Rs 600 crore by October this year. IDBI, LIC and SBI are the major stakeholders in the New Delhi-based institution.
Narasimham said with the infusion of Rs 1,000 crore capital, IFCI's net worth would be bolstered to about Rs 1,850 crore. The institution, which was expecting the PricewaterhouseCoopers report on a business plan by September-end, had on its own also prepared a medium-term strategy, he said.
The institution had repayment obligations of Rs 4,000 crore in the current financial year itself. IFCI had raised external commercial borrowings (ECBs) of $450 million during 1995-96. Besides, it had also raised Family Bonds of Rs 1,200 crore at 16-17 per cent between 1995 and 1997 as also short-term debt of Rs 1,000 crore at the same interest rate.
Narasimham said IFCI had two options, either to retain the five-year duration borrowings and seek a roll-over of the loans at a lower or prevalent market rates or repay the high cost borrowings. He said the normal repayments of the institution are about Rs 2,000 crore per annum and it would be difficult for IFCI to meet the huge obligations this year.
The chairman admitted that the institution did face asset-liability mismatch for the next few years because between 1997 and 1999, the institution had lent long whereas its borrowings were for a shorter duration. He said IFCI could manage on its own repayments of Rs 800-900 crore this year.
"Under such circumstances, the strategy is to negotiate interest on high cost borrowings, roll over some repayments or repay as and when the assets and equity investments mature," he said.
He said IFCI had non-performing assets (NPAs) of about Rs 6,000 crore which had been categorised into recent accretions of Rs 2,000 crore, another Rs 2,000 crore as suit-filed and BIFR cases and the balance as sticky accounts which are being restructured.
Of the last category, Narasimham said, 8-10 per cent accounts have been classified as NPAs having started production recently.
The chairman said the NPAs would be reduced by 50 per cent and the institution had decided not to extend loans of over Rs 100 crore.
