Industrial Finance Corporation of India (IFCI) Ltd.


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

At the time of independence in 1947, India's capital market was relatively under-developed. Although there was significant demand for new capital, there was a dearth of providers. Merchant bankers and underwriting firms were almost non-existent and commercial banks were not equipped to provide long-term industrial finance in any significant manner.

It is against this backdrop that the government established The Industrial Finance Corporation of India (IFCI) on July 1, 1948 under an Act of Parliament, as the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector. The newly-established DFI was provided access to low-cost funds through the central bank's Statutory Liquidity Ratio or SLR which in turn enabled it to provide loans and advances to corporate borrowers at concessional rates.
By the early 1990s, it was recognized that there was need for greater flexibility to respond to the changing financial system. It was also felt that IFCI should directly access the capital markets for its funds needs. It is with this objective that the constitution of IFCI was changed in 1993 from a statutory corporation to a company under the Indian Companies Act, 1956. Subsequently, the name of the company was also changed to "IFCI Limited" with effect from October 1999.
 
The Government of India converted its OCDs worth Rs. 923 crores into equity in December 2012 and further acquired preference shares of Rs. 60 crores from PSU Banks in April 2015. IFCI has become a Government of India Undertaking with effect from 7th April 2015.

The Govt. of India has placed a Venture Capital Fund of Rs. 200 crore for Scheduled Castes (SC) with IFCI with an aim to promote entrepreneurship among the Scheduled Castes (SC) and to provide concessional finance. IFCI has also committed a contribution of Rs.50 crore as lead investor and Sponsor of the Fund. IFCI Venture Capital Funds Ltd., a subsidiary of IFCI Ltd., is the Investment Manager of the Fund. The Fund has been operationalized during FY 2014-15 and IVCF is continuously making efforts for meeting the stated objective of the scheme.

Further, Government of India has recently designated IFCI as a nodal agency for “Scheme of Credit Enhancement Guarantee for Scheduled Caste (SC) Entrepreneurs” in March, 2015 with an objective to encourage entrepreneurship in lower strata of the societies. Under the Scheme IFCI would provide guarantee to banks against loans to young and start-up entrepreneurs belonging to scheduled castes.

Corporate Strategy

IFCI has been able to achieve a financial turnaround with the consistent support and cooperation of all its stakeholders and is now endeavouring to re-position itself.
In addition to its core competence in long term lending to industrial and infrastructure sectors, IFCI aims to enhance its organizational value through better realization of its Non-performing Assets (NPAs) and unlocking of value of its investment portfolio including unquoted investments as well as real estate assets.

Indian Economy and IFCI

Since its inception on 1st July 1948 as a Public Financial Institution, IFCI has made a significant contribution to the modernization of Indian industry, export promotion, import substitution, pollution control, energy conservation and generation through commercially viable and market-friendly initiatives. Some sectors that have directly benefited from IFCI include:
Some sectors that have directly benefited from IFCI include:
- Agro-based industry (textiles, paper, sugar)
- Service industry (hotels, hospitals)
- Basic industry (iron & steel, fertilizers, basic chemicals, cement)
- Capital & intermediate goods industry (electronics, synthetic fibres, synthetic plastics, miscellaneous chemicals) and Infrastructure (power generation, telecom services)

Financial Products


IFCI offers a wide range of products to the target customer segments to satisfy their specific financial needs. The product mix offering varies from one business/industry segment to another. IFCI customizes the product-mix to maximize customer satisfaction. It's domain knowledge and innovativeness make the product-mix a key differentiator for building, enduring and sustaining relationship with the borrowers.


Debt Segment

IFCI structures its Debt products based on the specific requirements of the corporate. Some of our products are :
- Short-term Loans for different short term requirements including pre-operative project expenses, meeting temporary cash flow mismatch, general corporate purposes, requirement of holding/ investment companies of good corporate for their investment requirements including subscription to right issue, purchase of warrants etc., funding working capital gap pending sanction by banks, refinancing high cost debt, meeting cost overrun in projects etc.
- Medium Term Loans for Project Finance for new industrial/ infrastructure projects, business expansion, technology up-gradation, modernization projects, R&D expenditure, general corporate requirements, supplementing long term working capital requirements, acquisition financing, securitization of debt, structured products, etc.
- Long Term Loans (more than 8 years) in Infrastructure Projects/ new Manufacturing Industries. IFCI shall also provide term loans in other sectors on selective basis based on strong ratings for Long Term facilities to reputed corporates. IFCI also provide Project Loans to meet the fund requirements of Greenfield projects, expansions/ modernization projects etc. across all industry.
- IFCI has also introduced products like Loans against future Lease Rentals, Loan against shares for top rated corporates etc.
 
Equity Segment

- Investment in IPO, Right issue, Qualified Institutional Placement (QIP), Warrants etc as well as in the secondary markets for listed companies.
- Strategic investment in unlisted companies.
- Trading in the secondary market including equity derivatives.
 
 
 


Monday, 04th Apr 2016, 08:46:23 AM

Add Your Comment:
Post Comment