The

Industrial

Finance

Corporation of India
Introduction:The Industrial Finance Corporation of India Limited was incorporated on July 1, 1948 by the Government of India as a tool to overcome the scarcity of long-term finance plans in the industrial sector. IFCI is the first Development Financial Institution in India. During the period of independence in 1947, the capital market scenario was horrendous. In spite of the major requirement of capital market in India, there were no providers for it. To add to the woes, there were no merchant bankers and underwriting firms. The commercial banks were not well-accoutered to render long-term financial plans in the industrial sector. Indian finance market were drowning into a well of failure when the Government of India decided to launch the IFCI with the aim to provide long-term financial plans to all the sectors of Indian industry. The Development Financial Institution in India (DFI) was incorporated with the aim to make access to inexpensive funds easy enough for the industrial sector through Central Bank's Statutory Liquidity Ratio or SLR. This Statutory Liquidity Ratio enabled the corporate borrowers to take loans and overtures at a much concessional rates. During the early 1990s, the Government of India realized that the financial system of the country needs more flexibility. The Government also felt that The Industrial Finance Corporation of India Limited needed to access directly to the capital market for any kinds of funds or other financial issues. At this point of time, that is in 1993, the Government of India took the decision of transferring IFCI from Statutory Liquidity Ratio to a company that would come under the Indian Companies Act, 1956.

Why IFCI
An ambitious greenhorn or an experienced professional of indomitable spirit, you owe it to yourself to consider a career with IFCI. Today IFCI has entered a new epoch of its functioning, and is driven by an absolute commitment to develop leadership in all spheres of its operation. We provide a stimulating work environment which encourages initiative, leadership, innovation, team spirit and offers rich/u nparalleled opportunities for professional andpersonalgrowth.

Benefits of IFCI:The Industrial Finance Corporation of India had made a wide range of contributions in various sectors in Indian industry. Some of the noteworthy contributions of IFCI include improvement of Indian industry, export promotion, import permutation, development in business, pollution control measures, energy preservation, and rendering direct and indirect employment. There are a number of industrial sectors that have been massively benefited from The Industrial Finance Corporation of India Limited. They are as follows:

Capital & intermediate goods industry that includes products such as electronics, synthetic plastics, synthetic fibers, and miscellaneous chemicals Service industries that include hotels and hospitals Consumer goods industry such as textiles, paper, and sugar Infrastructure sector which involves power generation and telecom services Basic industries involving products such as cement, iron & steel, fertilizers, basic chemicals

GENESIS OF IFCI
At the time of independence in 1947, Indias 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, 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 banks Statutory Liquidity Ratio or SLR which in turn enabled it to provide loans and advances to corporate borrowers at concessional rates.

LIBERALISATION - CONVERSION INTO COMPANY IN 1993 This arrangement continued until the early 1990s when 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.

Main Focus Of IFCI:The main focus of The Industrial Finance Corporation was to provide longterm financial benefits to various sectors in Indian industry and it has fulfilled it quite efficiently. IFCI has also been quite subservient in implementing the number of things that the Government of India planned up to ensure financial benefits into services. IFCI carried out all the responsibilities regarding Government's industrial policy initiatives till the establishment of ICICI in 1956 and IDBI in 1964.

IFCI has fulfilled its original mandate as a DFI by providing long-term financial support to all segments of Indian Industry. It has also been chiefly instrumental in translating the Governments development priorities into reality. Until the establishment of ICICI in 1956 and IDBI in 1964, IFCI remained solely responsible for implementation of the governments industrial policy initiatives. Its contribution to the modernization of Indian industry, export promotion, import substitution, entrepreneurship development, pollution control, energy conservation and generation of both direct and indirect employment is noteworthy. Some sectors that have directly benefited from IFCIs disbursals include: Consumer goods industry (textiles, paper, sugar); Service industries (hotels, hospitals); Basic industries (iron & steel, fertilizers, basic chemicals, cement); Capital & intermediate goods industries (electronics, synthetic fibers, synthetic plastics, miscellaneous chemicals); and Infrastructure (power generation, telecom services).

IFCI has been on the media radar only because of its woes. Few research houses have put out a report on IFCI, and even analysts were not forthcoming with their opinions. When contacted by BW, IFCI CEO R.M. Malla agreed to speak, but subsequently could not be reached.

IFCI's ECONOMIC CONTRIBUTION

The economic contributions of The Industrial Finance Corporation of India Limited has been quite large-scale since its establishment. IFCI has sanctioned funds of an amount of Rs. 462 billion to 5707 companies and has paid out Rs. 444 billion in totality. The business entrepreneurs have got immense help from IFCI as well when they started off with any new business or even on their way to expand the already existing business. IFCI has been a great helping hand to the entire industrial sector in India and most importantly it was the only support at the time of scarcity IFCIs economic contribution can be measured from the following: Cumulatively, IFCI has sanctioned financial assistance of Rs 462 billion to 5707 concerns and disbursed Rs 444 billion since inception. In the process, IFCI has catalysed investments worth Rs 2,526 billion in the industrial and infrastructure sectors. By way of illustration, IFCIs assistance has been helped create production capacities of: 6.5 million spindles in the textile industry 7.2 million tons per annum (tpa) of sugar production 1.7 million tpa of paper and paper products 18.5 million tons tpa of fertilizers 59.3 million tpa of cement 30.2 million tpa of iron and steel 32.8 million tpa of petroleum refining 14,953 MW of electricity 22,106 hotel rooms 5,544 hospital beds 8 port projects, 66 telecom projects and 1 bridge project.

IFCI, along with other institutions, has also promoted they are as follows :
Stock Holding Corporation of India Ltd. (SHCIL) Discount and Finance House of India Ltd. (DFHI) National Stock Exchange (NSE) OTCEI Securities Trading Corporation of India (STCI) LIC Housing Finance Ltd. GIC Grih Vitta Ltd., and Bio-tech Consortium Ltd. (BCL). IFCI has also set up Chairs in reputed educational/ management institutions and universities. A major contribution of IFCI has been in the early assistance provided by it to some of todays leading Indian entrepreneurs who may not have been able to start their enterprises or expand without the initial support from IFCI.

Financial Products
IFCI offers a wide range of products to the target customer segments to satisfy their specific financial needs. The product range includes following credit products: Short-term Loans (upto two years) for different short term requirements including bridge loan, Corporate Loan etc Medium-term Loans (more than two years to eight years) for business expansion, technology up-gradation, R&D expenditure, implementing early retirement scheme, Corporate Loan, supplementing working capital and repaying high cost debt Long-term Loans (more than eight years to upto 15 years) - Project Finance for new industrial/ infrastructure projects Takeout Finance, acquisition financing (as per extant RBI guidelines / Board approved policy), Corporate Loan, Securitisation of debt Structured Products: acquisition finance, pre-IPO investment, IPO finance, promoter funding, etc. Lease Financing Takeover of accounts from Banks / Financial Institutions / NBFCs Financing promoters contribution (private equity participation)/subscription to convertible warrants Purchase of Standard Assets and NPAs

Targeted Business Segments

Traditionally, IFCI has been meeting the changing requirements of the clients by endeavoring to

devise various schemes and financial products for multiple industry sectors. Major Financing Schemes of IFCI included Project Financing and Financial Services mainly to the manufacturing industry along with a diversified industrial portfolio. 1. Public Sector Undertakings 2. Manufacturing industry 3. Infrastructure projects Power Airports (brownfield) Ports Hotels Urban infrastructure projects NBFCs Participation in Private Equity Promoter funding and innovativeness make the product-mix a key differentiator for building enduring and sustaining relationship with the borrowers.

IFCIs Last Chance

During the mid-1990s, IFCI, along with ICICI and the Industrial Development Bank of India (IDBI) formed the triumvirate of term-lending institutions in the country. The financial landscape has changed much since, and both ICICI and IDBI have turned themselves into banks by reverse merging with their respective banking arms. IFCI has been in the doghouse, surviving mainly on financial resuscitation. It got into trouble following the shakeout in India Inc. due to the high interest rate regime during much of the 1990s, the downturn in commodity prices, especially steel, and questionable credit decisions.

Our competitive advantage is our employees. The employee benefit scheme encompasses every sphere of the individual's life. Some of theses are: Accommodation

Discounted housing facility at all major locations where our offices are located in India. Medical facilities

On-site medical centres with access to doctors and medicines. Medical coverage for indoor treatment of self and family members and limited reimbursement for OPD treatment. Cashless medical treatment at select hospitals. Comprehensive accidental insurance coverage. Loans and Advances

Discounted House Building Advance. Discounted Vehicle/PC Loans. Interest free House Furnishing/Festival Advance. Recreation

Enjoy vacations with family by staying at Holiday Homes at select tourist places. Indoor Games facilities (at Corporate Office) In-house fitness centre(at Corporate Office) Others

ATM.

IFCI finally wipes off huge losses

IFCI Ltd, the oldest development financial institution in the country, has turned around after making a super normal profit. The institution, which has started the process of roping in a strategic partner, has registered the highest-ever profit before tax of Rs 1,237 crore against a loss of Rs 266 crore in the previous year. The profit after tax for the year is Rs 898 crore against a loss of Rs 74 crore in the previous year. In addition, due to the exorbitant profits, IFCI's net worth turned positive with a capital-adequacy ratio of 14.04. The institution has also provided against its entire non-performing assets. As a result, its net non-performing assets are zero. Its total income increased to Rs 2,047 crore in 2006-07 against Rs 1,683 crore in the previous year, an increase of 22 per cent. Significantly, IFCI started providing loans to corporates in 2006-07. In the previous financial year loans of Rs 1,000 crore were sanctioned and during 2007-08, it proposes to sanction and disburse loans of about Rs 2,500 crore to companies. During the year, IFCI made a profit of Rs 793.30 crore on account of the sale of shares in certain concerns where assistance was given as part of promotional development financing, which includes NSA and ICRA, the credit rating agency. IFCI has appointed Ernst and amp; Young to find a strategic investor. The results for 20006-07 are expected to fetch a better valuation from the global and Indian banks and financial institutions as well as corporate house that are eying a strategic stake, say industry experts.

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