Looking at strategic direction, not capital infusion: IFCI MD

IFCI, the country���s oldest financial institution, is on the comeback trail. It managed to create fresh assets of Rs 3,000 crore in the year ended March 2009. The institution made a net profit of Rs 142.54 crore in the fourth quarter against a net loss of Rs 42.52 crore in the same period last year. Emboldened by the financial results, the company plans to expand in the public-private partnership space. IFCI managing director and chief executive Atul Rai discussed the various challenges faced by the company in a freewheeling interview with ET NOW.

The stake sale process has raised several questions. Has the government agreed to the sell off plan?

It is the right of the government to convert debentures into equity or interest-bearing instruments. This issue is still alive. Once this is settled, we can bring in a strategic investor. The only thing that I can share with you is that the matter is still to be clinched one way or the other. We are in a position to improve our balance sheet without bring in additional capital. However, the final decision on bringing in a strategic investor rests with the government.

Is IFCI looking to expand into banking sector?

IFCI is a 60-year old institution. It is for the regulators to decide whether IFCI, with its 20% or whatever capital adequacy ratio, can be of any use in the evolution of banking landscape in the country. If you ask me, our priority right now is to do well in the sector we are, so that we can take upon new roles and challenges.

Rising NPAs is a concern for all financial institutions. What has been your experience in that sphere?

Our net NPAs have been zero. We���ve had some systematic slippage on which RBI has given some direction. So there might be some NPAs in this quarter. There are these systematic wide cases and we���ve nothing to do with their genesis. We have recovered about Rs 12,000 crore last year, against the target of Rs 6,000 crore. IFCI has demonstrated its strength in recovering NPAs.

Are you looking to raise resources?

Now, that we have good credit ratings, we should be looking at raising resources. We���ve raised resources sporadically so far. But a big bang resource raising exercise should be happening later this year. We are not a deposittaking entity, so we have to do something else. Normally it would be something like placement with institutional investors.

Several private players have evinced interest in buying a stake in IFCI. What kind of synergies you are looking for?

In our case, the only thing would be pricing and the percentage of stake sale. The important thing is what we are willing to give to the investor and what we want from them. What we expect from investors today is not capital. We expect strategic direction or the ability of the investor to infuse a sense of purpose and competence.

What are the areas you looking to expand in your current role?

The public-private partnership framework will need players like IFCI that can bring credibility to that whole model, which private sector players will not be able to do.