Grappling with more than 26% non-performing assets (NPA) on its books as well as losses, state-owned lender IFCI Ltd is planning a multi-pronged strategy to move back to profitability.
Selling its stakes in National Stock Exchange (NSE) and Clearing Corporation of India (CCIL), and focusing on recovery and resolution of stressed assets via the insolvency and bankruptcy code are the priorities, E.S. Rao, managing director and chief executive officer, said in an interview.
“We are cleaning the books as far as possible. While additions to the NPA every quarter are coming down, we are also stepping up our recovery efforts. We have recovered Rs672 crore of bad loans in the nine months ended December as against Rs812 crore in the whole of 2016-17,” Rao said.
IFCI’s net NPAs were at 26.49% while gross NPAs stood at 35.8% as of end December. It made provisions or wrote off bad debts worth more than Rs411 crore, which resulted in the company reporting a loss of Rs176 crore in the quarter.
Rao said the company is hopeful that with resolution of cases currently being heard by the National Company Law Tribunal, gross NPAs could halve.
As of December end, gross NPAs were at Rs8,110 crore.
IFCI is aiming to make the bulk of the provisioning for its bad debts this fiscal and plans to start the next year with a clean slate.
The company is also trying to raise funds through divestments of its stake in NSE and CCIL and through sale of non-core assets, including real estate holdings.
IFCI holds 2.85% stake in NSE after having sold 0.2% of its holdings in January. It has a 4% stake in CCIL.
IFCI is also derisking its balance sheet by being selective in its financing of industry, agriculture and infrastructure and financing projects that have good credit ratings.
“We are refinancing infrastructure projects that are up and running to minimize risks,” Rao said.
The company had sanctioned Rs5,278 crore in loans as of 31 December and disbursements were at Rs3,618 crore.
Going ahead, the focus will be to maintain a positive net interest income, report operational profits and maintain adequate capital adequacy, he added.
IFCI’s capital adequacy was at 15.2% as of December end. It received a capital infusion of Rs 100 crore from the government in the current quarter and will leverage it to raise debt from the market when required.
Source: Mint