Mckinsey Moots Rs 8800 Crore Capital Shot For Ifci

As part of restructuring the beleaguered financial institution IFCI Ltd, global consulting firm McKinsey & Co has recommended a capital infusion of up to Rs 8,800 crore by the government and stakeholders.

According to the revamp plan, while bailing out IFCI would call for support in the range of Rs 2,600 crore to Rs 8,800 crore depending on the liability restructuring that the institution is able to undertake, the cost of liquidation has been put between Rs 8,800-12,200 crore. The Centre alone would take a hit of Rs 3,000 crore on its investments.

The McKinsey recommendations which also lay out a future business plan for IFCI assume significance as a group of ministers is expected to discuss the issue of a bail-out for IFCI.

Quoting the Pricewaterhouse-Coopers (PwC) report on asset classification, McKinsey has also pointed out that IFCI had bad assets of over Rs 12,000 crore, a large number of which had not been provided for. PwC had mooted that IFCI double its provisioning for bad and doubtful assets from Rs 2,200 crore in 2000-01 to Rs 4,500 crore.

The institution, however, decided to reject the report and had asked McKinsey to prepare a business plan. Executives told Business Standard that PwC