Ifci May Hive Off Weak Assets

IFCI today decided to adopt a two-pronged strategy to try and steer itself into the black by the next financial year. The strategy for the restructuring of the 53-year-old institution focuses on management of non-performing assets and restructuring liabilities.

Institution sources told Business Standard that McKinsey & Co, which has been appointed as a consultant for restructuring, has proposed splitting the FI into two parts, good and bad companies.

Senior executives said in its presentation to the steering committee for revival appointed by the IFCI board, McKinsey proposed that the bad assets should be hived off into a separate company and a strategic partner should be roped in for this entity. They added that though some discussions had been held with prospective partners which specialise in recovery of non-performing assets, absence of a proper legal framework was acting as a bottleneck.

They added that IFCI would also try and rope in partners for the ARC, Asset Care Enterprise Ltd, with an authorised capital of Rs 20 crore. For the good bank, McKinsey has recommended that it should try and diversify its activities and sell a part of the assets and various ways to restructure liabilities.

Sources said the steering committee was of the opinion that roping in a strategic partner or a merger would take 3-5 years but it was important to reinvent India