IFCI Ltd, the oldest development financial institution in the country, has turned around after making a super normal profit. The institution, which has started the process of roping in a strategic partner, has registered the highest-ever profit before tax of Rs 1,237 crore against a loss of Rs 266 crore in the previous year. The profit after tax for the year is Rs 898 crore against a loss of Rs 74 crore in the previous year.
In addition, due to the exorbitant profits, IFCI’s net worth turned positive with a capital-adequacy ratio of 14.04. The institution has also provided against its entire non-performing assets. As a result, its net non-performing assets are zero. Its total income increased to Rs 2,047 crore in 2006-07 against Rs 1,683 crore in the previous year, an increase of 22 per cent.
Significantly, IFCI started providing loans to corporates in 2006-07. In the previous financial year loans of Rs 1,000 crore were sanctioned and during 2007-08, it proposes to sanction and disburse loans of about Rs 2,500 crore to companies.
During the year, IFCI made a profit of Rs 793.30 crore on account of the sale of shares in certain concerns where assistance was given as part of promotional development financing, which includes NSA and ICRA, the credit rating agency.
IFCI has appointed Ernst & Young to find a strategic investor. The results for 20006-07 are expected to fetch a better valuation from the global and Indian banks and financial institutions as well as corporate house that are eying a strategic stake, say industry experts.
On expectations of good results, IFCI’s stock price on Thursday rose by over 4 per cent to Rs 46.65 from the previous close of Rs 44.80. In fact, ever since it appointed Ernst &Young as an adviser, IFCI’s share price has climbed 61 per cent from Rs 28.95.