NEW DELHI, Dec 22: The Indian government has decided to inject Rs 500 crore in state-owned IFCI to enhance its financial stability in anticipation of the company’s planned restructuring and consolidation into a group.
This capital infusion is expected to raise the Indian government’s stake in IFCI from the current 71.72 percent as of September 2024.
The plan for this capital infusion was authorized through the recent passage of the first Supplementary Demand for Grants for the fiscal year 2024-25 in the Lok Sabha last week.
The Supplementary Demand for Grants allocated an additional Rs 499.99 crore for ‘Subscription to the Share Capital of Industrial Finance Corporation of India (IFCI).
“Considering savings of Rs 50.07 crore from the same section of the grant, the remaining Rs 449.92 crore will be drawn from the surrender of savings in the capital section of Demand No.30-DEA, ensuring no additional cash outflow,” stated the Supplementary Demand for Grants.
Earlier this year, IFCI successfully raised Rs 500 crore by issuing equity shares to the government.
Founded on July 1, 1948, the Industrial Finance Corporation of India was the first Development Financial Institution in the nation.
In the second quarter ending September 2024, IFCI reported a loss of Rs 22 crore, with total losses of Rs 170 crore for the first half of FY24.
As part of its restructuring efforts, the Department of Financial Services (DFS) under the Ministry of Finance last month approved the principle of ‘Consolidation of IFCI Group,’ which involves the merger of IFCI Limited with StockHolding Corporation of India Limited and other group companies.
According to the proposal, StockHolding Corporation of India Ltd, IFCI Factors Ltd, IFCI Infrastructure Development Ltd, and IIDL Realtors Ltd will merge with IFCI Ltd.
Moreover, StockHolding Services Ltd, IFCI Financial Services Ltd, IFIN Commodities Ltd, and IFIN Credit Ltd will be incorporated into a single entity, which will be a direct subsidiary of the newly consolidated listed entity.
Additionally, subsidiaries like StockHolding Document Management Services Ltd, StockHolding Securities IFSC Ltd, IFIN Securities Finance Ltd, IFCI Venture Capital Funds Ltd, and MPCON Ltd will also be direct subsidiaries of the consolidated IFCI.
Established as a statutory corporation in 1948, IFCI currently operates numerous subsidiaries, joint ventures, and affiliates.
By the early 1990s, a need for increased flexibility to adapt to the evolving financial landscape was recognized. It became apparent that IFCI required direct access to capital markets for its funding.
Consequently, in 1993, IFCI was reconstituted from a statutory corporation into a company under the Indian Companies Act, 1956.
The company’s name was changed to ‘IFCI Ltd’ in October 1999.
In 2015, the government increased its shareholding in the company to over 51 percent, thereby classifying it as a public sector entity. (PTI)
