IFCI's Q2 net profit declines by 48%

IFCI has recorded a 48 per cent decline in net profit at Rs 259 crore in the second quarter ended September 30 as against Rs 497 crore in the corresponding quarter last year.

The dip in profit is mainly on account of lower income from operations and recovery of bad loans. Income from operations fell by 35 per cent to Rs 383 crore in the July-September period of 2008-09 as against Rs 591.6 crore in the same period of 2007-08.

The company also informed that at the AGM last month, the shareholders had approved reduction of share capital for aligning stake of LIC to 8.39 per cent.

LIC had earlier approached the IFCI management to lower its holding from 11.39 per cent to 8.39 per cent, the level it held prior to conversion of its debt into equity last year.

The company need to add fresh asset of Rs 2,000 crore to be able to maintain the bottomline, IFCI CEO Atul Rai had said. In addition, recovery from non performing assets would add about Rs 600 crore to the bottomline of which write back may be little less than that, he had said. IFCI share price today rose 3.79 per cent to Rs 30.10 on the Bombay Stock Exchange as against the previous closing of Rs 29.

NewsWire18 adds: IFCI has been able to grow its balance sheet size for the first time in 40 quarters, Atul Kumar Rai, chief executive officer and managing director of the non-banking finance company, said today while declaring its results for July-September.

“We were not creating any assets for the last 40 quarters. For the first time after that, we have created assets in September quarter,” he said.

IFCI balance sheet size as on September 30 was Rs 14,678 crore compared with Rs 13,548 crore as on March 31.

Rai said the company plans to create fresh assets totalling Rs 2,000 crore rupees this financial year.

“We have the sanctions to create assets worth Rs 2,100 crore. But since what we create is going to be a certain percentage of what we sanction, we need some more sanctions from our board,” he said.

Rai said IFCI had raised Rs 200 crore in long-term debt this financial year and plans to raise another Rs 500 crore of long-term debt.

“We plan to raise Rs 1,000 crore in equity and debt in 2009-10. But any equity infusion will be from strategic point of view only,” he said.

He said IFCI has the ability to raise fresh funds even under the prevailing market scenario. The current crisis in the global and domestic financial markets had forced the company to slow down its asset recovery, he said.

“The recovery has been affected. The assets which are available to us do not have the security backing or value which the assets disposed earlier had,” he said, adding, “What we were able to recover so far were the low hanging fruits.”

He said the current scenario prevented IFCI from disposing off its bad assets.