New Delhi: The country’s oldest financial institution IFCI on Wednesday said it is committed to induct strategic partner and the process would start after the government clarifies stand on convertible bonds.
“We have been not able to resume the consideration of the process of induction of strategic investor although we remain committed to it,” IFCI CEO and managing director Atul K Rai told PTI.
“Once we receive that (clarity on optionally convertible debentures worth Rs523 crore), only then we can take a call (on strategic sale),” he said.
If the government converts these bonds into share at the moment then it becomes shareholder in the company, he said, adding that the strategic investors has to deal with the government as the shareholder.
Rai said, “if the government continues to hold these debenture then the nature of what you are selling is not clear.”
The reason being, he said, the new stakeholder may not have clarity whether in future the government would continue to hold bonds or would convert those instruments into equity.
He said, “So this should be clarified before resuming this process (of strategic sale) and that where matter stands formally even today because no finality has been reached on what will happen to these convertible debentures.”
Stating that there is no immediate capital requirement for running the company, Rai said that the capital adequacy of IFCI is in excess of 20% against the regulatory requirement of 10%.
“If the capital adequacy is 20% that means we can double our balance sheet size without any further capital induction,” he said.
“So, the issue of induction of strategic investor to provide capital will have to be looked at in the context of capital adequacy now being more than 20%,” he added.
Last week, IFCI reported a net profit of Rs142.50 crore for the quarter ended 31 March 2009, and also declared a dividend after a gap of 10 years.
The company had a net loss of Rs42.5 crore in the March quarter of FY08.
However, total income decreased to Rs369.5 crore during the quarter from Rs451.3 crore in the quarter ended 31 March 2008.
The company proposed a dividend of 8% for the year ended 31 March 2009.
The net profit of the company during 2008-09 declined by 35.5% to Rs657.1 crore against Rs1,020.5 crore in the previous fiscal.