IFCI (IFCI) Q4 02/03 earnings summary

Executive summary

• FY2002-03 net loss narrowed to Rs.2,597 million from Rs.8,847 million, aided by Rs.18,300 million in extraordinary income tied to Government of India liability assumption.

• Restructuring of liabilities and NPA resolution remained central to restoring liquidity, profitability and sustainable operations.

Financial highlights

• Total income fell to Rs.14,382 million from Rs.22,486 million; operating income declined to Rs.14,035 million from Rs.22,185 million.

• Operating loss before provisions improved to Rs.2,080 million from Rs.2,531 million; loss after tax was Rs.2,597 million versus Rs.8,847 million.

• Bad-asset write-offs and provisions totaled Rs.18,817 million; the Rs.18,300 million extraordinary item reflected liabilities taken over by the Government of India.

• No equity or preference dividend was recommended due to the year’s loss; basic and diluted EPS was negative Rs.4.78 versus negative Rs.14.57.

Outlook and guidance

• FY2003-04 priorities: restructure remaining liabilities, retire high-cost debt, transfer stressed assets to an ARC, improve profitability and restore credit ratings.

• Intended growth levers include SME fund- and fee-based services, advisory work, securitisation, loan-origination partnerships and cost control.

• Recovery prospects were expected to benefit from improved capacity utilization and performance in steel, textiles and cement; profitability still depends on adequate spreads in a low-rate environment.

• Opportunities from industrial and infrastructure investment depend on resolving NPAs, strengthening capital adequacy and debt-equity ratios, and raising funds at competitive cost.