Government to revamp IFCI Ltd into infrastructure advisory firm, as per reports; stock fall 5% intraday

A Reuters report, quoting two anonymous government sources, said that the decision has been taken due to the company’s capital constraints. The government is now planning to revamp IFCI by converting it into an infrastructure advisory firm.

According to the report, IFCI was asked to stop fresh lending in FY 2021-22 after bad loans increased. According to the revamp plan, IFCI would not resume lending and instead expand the scope of its infrastructure advisory service to include evaluation of state governments’ infrastructure and green projects.

Meanwhile, IFCI announced last week, on November 22, that its board approved considering the merger of group companies as part of a consolidation exercise.

The merger was initiated after IFCI received a communication from the Department of Financial Services (DFS), which is under the Ministry of Finance, to consider consolidating the group.

IFCI shares declined as much as 5.18% on the National Stock Exchange of India (NSE) to hit an intraday low of ₹61.2 apiece. However, the PSU stock recovered some early losses to trade at ₹63.06 apiece, down 2.31%, on the NSE at 2:15 pm. The stock had closed over 11% higher in the previous session after the announcement of group consolidation.

The Reuters report also said that the government was planning to infuse ₹500 crore into IFCI this year for its revamp. Any further capital infusion will only be there to ensure there are no defaults in the company’s repayment commitments, it added.

Moreover, IFCI’s revival plan may also include monetising the company’s real estate assets and renting its office spaces.

IFCI, which was established in 1948, is a non-deposit-taking NBFC in the public sector. The Indian government currently owns nearly 72% of the company.