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.
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.
You’ve reached your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%