Financial institution IFCI’s net profit declined by 34 percent to Rs 131.01 crore for second quarter ended September 30.
The company had profit after tax of Rs 198.26 crore in the same period last fiscal, IFCI said in a filing on the BSE. The total income of the company also slipped to Rs 695.73 crore as compared to Rs 726.11 crore in the same quarter a year ago.
During the first half of 2011-12, the company’s net profit decreased by 32 percent to Rs 224.62 crore as compared to Rs 320 crore in same period of the previous fiscal. Earlier this week, the company alloted 40 crore shares to the Government of India following conversion of bonds. As a result of this, the government’s stake in the company touched 55.5 percent in the company.
Earlier this month, the board of IFCI had decided to convert government bonds worth Rs 923 crore into equity. Following the conversion, the direct shareholding of the government in IFCI will increase to 55.57 per cent making it a government company.
IFCI, a term lender, is promoted by financial institutions and banks, including LIC. In August, the Union Cabinet approved conversion of Rs 923 crore of debentures held by it in IFCI into equity.
After conversion of the Optionally Convertible Debentures (OCDs), the government holding including the stake of banks and financial institutions have gone up to 68.31 percent.
Since 2001, the government had been giving funds to IFCI to tide over the financial problems. It initially gave Rs 400 crore in the form of 20-year OCDs.
Later in 2002-03, as part of the financial restructuring package of Rs 5,220 crore, the government gave IFCI Rs 523 crore as loan in the form of OCDs. However, the government stopped releasing funds after IFCI started making profits. The government equity came down to below the threshold limit of 51 percent in 2005.