IFCI (IFCI) Q4 01/02 earnings summary

Executive summary

• FY 2001-02 total income fell to Rs 22,486.49 million from Rs 28,903.90 million; net loss widened to Rs 8,847 million from Rs 2,659.31 million.

• Operating loss reflected lower income from loans and debentures, rising impaired-asset provisions and reduced interest-earning assets; no dividend was recommended.

• Strategy centered on recapitalization, balance-sheet restructuring, transfer of stressed assets to an ARC and development of a mid-corporate, fee-based business.

Financial highlights

• Income from operations was Rs 22,185.30 million vs Rs 28,799.28 million YoY; other income was Rs 301.19 million vs Rs 104.62 million.

• Loss before provisions for bad and doubtful debts, investments and tax was Rs 2,531.27 million, versus profit of Rs 2,339.67 million in FY 2000-01.

• Loss before and after tax was Rs 8,847 million; basic EPS was -Rs 14.57 vs -Rs 5.09.

• Cost of borrowings declined to Rs 23,934.30 million from Rs 25,200.85 million, while average rupee borrowing cost fell to 10.57% from 11.86%.

• No equity or preference dividend was recommended; Rs 200 million of preference shares were redeemed despite insufficient profits to meet the associated capital-reserve requirement.

Outlook and guidance

• Management targeted maintaining outstanding assistance near current levels and avoiding new greenfield steel financing.

• Strategy called for a stressed-asset ARC, liability restructuring and recapitalization, a viable mid-corporate lending/advisory business, and organizational transformation.

• A turnaround in the financial position and progress in managing NPAs through the ARC were expected in the months ahead.

• Softer interest rates, infrastructure investment and second-generation reforms were expected to support credit demand and industrial revival in FY 2002-03.