IFCI (IFCI) Q4 00/01 earnings summary

Executive summary

• FY 2000-01 total income was Rs. 28,903.90 million; loss before tax was Rs. 2,619.31 million and loss after tax was Rs. 2,659.31 million, versus profit after tax of Rs. 593.71 million in FY00.

• Operations were scaled back amid weak industrial investment demand, rising NPAs and tightening prudential rules; management prioritized portfolio consolidation, recoveries and a shift toward short-term products.

Financial highlights

• Income from operations was Rs. 28,799.28 million, versus Rs. 28,433.79 million YoY; other income fell to Rs. 104.62 million from Rs. 563.81 million, including prior-year fixed-asset sale gains of Rs. 332.76 million.

• Profit before bad-debt and investment provisions and tax was Rs. 1,887.80 million; provisions/write-offs for bad and doubtful loans and investments were Rs. 5,825.74 million, driving the loss before tax.

• Sanctions declined to Rs. 18,584.6 million from Rs. 20,800.2 million; disbursements fell to Rs. 21,209.5 million from Rs. 32,720.9 million.

• No equity dividend was proposed due to inadequate profits; preference-share dividends of Rs. 482.49 million were paid.

Outlook and guidance

• FY02 budget set sanctions and disbursements at Rs. 16,000 million each, including Rs. 15,000 million fund-based sanctions/disbursements and Rs. 1,000 million non-fund-based; long- and short-term products each targeted at 50%.

• Management expected limited near-term business growth given weak industrial activity, deteriorating capital adequacy and debt-equity ratios, and resource constraints; outstanding assistance was targeted to remain near current levels for 1–2 years.

• Strategy aimed to reduce project finance to roughly 50–60% of business assets, expand short-term products and fee-based services, and reduce NPAs by at least Rs. 5,000 million annually over three years.