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Informist, Tuesday, Apr. 8, 2025

 

--Fin min source: Govt may merge IFCI with IIFCL post latter's listing

--Fin min source: See synergies in infra lending from merging IFCI, IIFCL

 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI - State-owned India Infrastructure Finance Co. Ltd., once listed, may be merged with struggling infrastructure lender IFCI Ltd., given the former's steady financial performance, according to a finance ministry official.

 

"Once initial public offering of IIFCL is done and it is listed on the exchanges, we may look at merging it with other state-owned financing company IFCI for greater synergy," the official told Informist on the condition of anonymity. Informist had reported in January, quoting a company source, that the board of IIFCL had given the go-ahead for the lender to go public and that the proposal was with the finance ministry.

 

IIFCL has been performing well financially for the past few years, posting a net profit of INR 13.42 billion in the first three quarters of 2024-25 (Apr-Mar) after reporting a 44% increase in the bottomline in FY24 at INR 15.52 billion. IFCI, on the other hand, had a consolidated net loss of INR 306.6 million in Oct-Dec. For the nine months ended December, the lender's net loss increased to INR 562.4 million from a loss of INR 296.7 million in the corresponding period a year ago.

 

"It does not make sense for government to continue to put in money in a PSU (IFCI) which is not doing well. Since both the companies perform similar activities in the same sector it will be better if one strong entity continues," the above mentioned official added. In February, the Indian government had infused INR 5.00 billion as capital into IFCI, which increased its stake in the company to 72.57%.

 

Set up in 1948, IFCI is a systemically important non-deposit taking non-banking finance company that finances projects in the airports, roads, telecom, power, real estate, manufacturing, services sector, and other allied industries. IIFCL is a wholly-owned government unit set up in 2006 to provide long-term financial assistance to infrastructure projects.

 

In addition to the profitability, the quality and growth of IFCI's loan book is a concern. As on Dec. 31, the gross non-performing asset ratio of the lender had increased to 96.30% from 96.21% as on Sept. 30. "Though gross NPA level percentage has increased, gross NPA level is coming down in absolute terms on account of IFCI not taking any fresh loan exposure and thereby shrinkage of standard loan accounts," the company had said in February while detailing the Oct-Dec results.

 

At 1404 IST, shares of IFCI were trading at INR 41.16 on the National Stock Exchange, up 1.8% from Monday.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

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