IFCI Share price and Fundamental Analysis

Company History

IFCI Ltd is engaged in project financing, infrastructure development, debt and equity underwriting and syndication, venture capital, stock broking and merchant banking, factoring, asset reconstruction, tourism finance, micro finance, corporate and infrastructure advisory, technical consultancy and management education. Financial products include Short-term Loans, Long-term Loans, Lease Financing and structured products: acquisition finance, pre-initial public offering (IPO) investment, IPO finance and promoter funding.

The company is a Nodal Agency for monitoring of Sugar Development Fund (SDF) loans for projects related to modernization and expansion, co-generation of power and production of alcohol/ethanol in the private sector. Their corporate advisory services include corporate advisory and infrastructure services, infrastructure advisory, monitoring agency for public issues, restructuring advisory services and bid process management.

The Company has also been designated by Government of India, as the Nodal Agency under the Scheme of Credit Enhancement Guarantee for Scheduled Castes Entrepreneurs to provide guarantee to banks against loans to young and start-up entrepreneurs belonging to scheduled caste with an objective to encourage entrepreneurship in marginal strata of the society.

IFCI was established in the year 1948 by an Act of Parliament to provide institutional finance for industrial development in the country. It was subsequently corporative in July 1993 after passing of the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993 by the Parliament of India.

The company was registered as a non-banking financial company with RBI during the year 1998, but was exempted from most of the regulatory guidelines for non-banking financial companies, being regulated as a financial institution. The name of the company was changed from The Industrial Finance Corporation of India Ltd to IFCI Ltd with effect from October 27, 1999.

During the year 1999-2000, the IFCI Investors Services Ltd and IFCI Custodial Services Ltd, wholly owned subsidiaries of the company were amalgamated with IFCI Financial Services Ltd (another wholly owned subsidiary company). In the year 2000, IFCI and the Dubai-based Mashreq Bank Group signed an agreement for the first trance of a million syndicated loans.

In the year 2003, the company took over Arihant Industries Export Oriented Unit (EOU) under the Securitization Act. In the year 2004, the company merged with Punjab National Bank (PNB) would help each other.

During the period 2005-06, the company was conferred an award for 'Corporate Excellence' instituted by the Amity Business School and presented every year to select corporate for outstanding performance in various areas. From August 2007 onwards, the company is being regulated as a non-banking financial company. During the year 2007-08, the company promoted IFCI Infrastructure Development Ltd (IIDL) as a wholly owned subsidiary.

During the year 2008-09, the company forayed into factoring business by acquiring an additional stake in Foremost Factors Ltd. In April 2008, the company re-christened Foremost Factors Ltd as 'IFCI Factors Ltd'. The company subscribed Rs 25 lakh to the rights issue of MPCON, one of the Technical Consultancy Organizations promoted by IFCI in the year 1979, with a view to expanding our business outlook and reaping business opportunities in the highly lucrative consulting sector. With this infusion of capital, MPCON is now a subsidiary of the company.

During the year 2010-11, the company accelerated their operations and re-established their presence in the financial market by enlarging and retaining high value customer base.

During FY 2011-12, the company has taken initiatives in expanding the horizon of its treasury operations and entering into new segments like securities lending and borrowing schemes, currency futures, and repo and reverse repo transactions in corporate bonds with the objective of hedging as well as enlarging the scope of earning revenue with minimum risk.

During the year 2012-13, Government of India increased its shareholding in the company by converting optionally convertible debentures into equity shares, thereby making it the majority shareholder with a 55.53% equity stake in IFCI Ltd. During the year 2014, the company for the first time introduced an IFCI Benchmark Rate (IBR) in January 2014, the lowest rate (with monthly rests) at which it can lend, similar to the Base Rate of Banks. It has been decided to review the IBR quarterly (or earlier, if required) in a scientific and transparent manner, generally based on regulatory guidelines for fixation of Base Rate in Banks and prevailing market best practices.

During FY 2013-14, the Company acquired 18.95% equity stake of IDBI Bank Ltd in Stock Holding Corporation of India Ltd (SHCIL) consequently your Company's equity holding in SHCIL has increased from 33.91% to 52.86% thereby making it a subsidiary. This will bring substantial business opportunities through SHCIL's 196 branches.

During FY 2013-14, the Company has also undertaken and completed interior work for 6 branches of Bharatiya Mahila Bank (BMB) located at New Delhi, Ahmedabad, Guwahati, Kolkata, Bangalore and Chennai.

During the FY 2014-15, the company restored and reoperationalized its six Regional Offices at Bhopal, Bhubaneswar, Kochi, Lucknow, Patna and Pune. It will increase its Pan-India presence and will provide the requisite fillip to tap new business from the regions. The company came out with a Public Issue of Non-Convertible Debentures (NCDs) after about two decades and successfully raised an amount of Rs. 1,972.26 crore at competitive cost.

During FY 2014-15, IFCI acquired 980 equity shares of Rajasthan Consultancy Organisation Ltd (RAJCON), equivalent to 49% of equity shareholding, from HARDICON, as a result of which RAJCON has become an Associate Company of IFCI. IFCI's shareholding in Asset Care and Reconstruction Enterprise Ltd (ACRE) has declined from 37.91% to 19.55%, due to preferential allotment by ACRE and acquisition of 80,000 equity shares of ACRE, by the Company from MPCON.

During the FY2015-16, the Govt. of India acquired 6,00,00,000 Preference Shares of Rs 10/- each of the Company from certain Scheduled Commercial Banks and consequently increased its holding from 47.93% to 51.04% of the Paid-up Share Capital of the Company. Consequently, the Company became a Government Company in terms of Section 2 (45) of the Companies Act, 2013, with effect from 07 April 2015.

As on March 31, 2017, IFCI held 49% shareholding in HIMCoN, making it an Associate Company of IFCI and the entire investment has since been divested.

Consequent upon transfer of IFCI's entire stake in HARDICoN Ltd (HARDICoN), it has ceased to be an Associate Company of IFCI during the year 2017. Further, subsequent to the year under report, HIMCoN and NITCoN have also ceased to be Associate companies of IFCI consequent to transfer of IFCI's entire stake in these companies.

During the year under consideration, the Company, sanctioned and disbursed loans to the tune of Rs.3,760 crore and Rs.3,238 crore, respectively vis--vis sanctions and disbursement of Rs.7,216 crore and Rs.4,434 crore, respectively in FY 2017-18.

During the FY 2018-19, the Company focused on recoveries from Non-Performing Accounts (NPA), by initiating various proactive measures. Aggregate amount of Rs.1,207 crore was recovered from NPAs including NCLT resolution cases, amounting to Rs.1007.30 crore. Besides this, the Company was also successful in exiting from few of the long standing unquoted project equity investments and recovered Rs.780 crore including Rs.745 crore from Equity Shares in thermal power sector. The Company had received security receipts against part value of assignments of certain NPAs to Asset Reconstruction Companies (ARCs). During the year under report, redemption of some of security receipts resulted in recovery of Rs.555 crore.

During the FY 2018-19, Stock Holding Corporation of India Ltd. (SHCIL) had incorporated a wholly owned subsidiary viz., Stock Holding Securities IFSC Limited for operations in the International Financial Services Centre at Gujarat International Finance Tec City (GIFT) in Gujarat.

During the FY 2018-19, a step-down subsidiary of Stock Holding Corporation of India Ltd. viz. Stock Holding Securities IFSC Limited was incorporated.During FY under review, the entire 22,50,00,000 number of preference shares, which were due for redemption in different tranches during the FY 2018-19 till FY 2020-21; were pre-redeemed on August 31, 2018.

As on March 31, 2019, the Company had investment in 27,41,54,700 no of shares in its subsidiary, IFCI Factors Ltd. (IFL), comprising of 19,91,54,700 No of equity shares and 7,50,00,000 compulsorily convertible preference shares (CCPS).