IFCI turns headless as MD, deputy MD finish stints

Government-owned finance company IFCI has become headless with its Managing Director Malay Mukherjee and Deputy Managing Director Achal Kumar Gupta completing their contracts over the weekend. Mukherjee and Gupta had come on board on December 12, 2013, with a three-year contract.

As an interim step, the government has given the additional charge of deputy managing director to Sanjeev Kaushik, currently deputy managing director of India Infrastructure Finance Company.

Sudhir Garg, executive director of IFCI, has also moved out after his contract ended last week. IFCI is facing vacuum at the top when it is reeling under non-performing assets (NPAs). As much as 22 per cent of loans are NPAs. In the absence of top leadership, there is high risk of some borderline cases (weak but standard loans), slipping into defaults, said IFCI executives.

This, however, doesn’t seem to have affected the scrip. On Friday (December 9), the IFCI stock closed 16 per cent higher at ~27 a share on the BSE.

IFCI posted a drop in net profit at ~14.86 crore in the second quarter ended September 2016 from a net profit of ~182.61 crore in the same period in 2015-16. The operational income declined by 28 per cent in the second quarter of the current year to ~763 crore from ~1,057 crore in the year-ago quarter. This was due to a reversal of income in respect of fresh slippages, pre-payments and low credit off-take.

Gross NPAs rose to 22.6 per cent at the end of September 2016 – up from 13.1 per cent in March 2016. The net NPAs also rose to 18.4 per cent in September 2016 from 9.5 per cent at the end of March 2016.

The downgrading of certain standard accounts, on account of reduction in the loan portfolio due to prepayments and low credit offtake, pushed the tally of bad loans. Its provision coverage ratio declined to 46 per cent in September 2016 from 57 per cent in March 2016.

IFCI posted a drop in net profit at ~14.86 crore in the second quarter ended September 2016 from a net profit of ~182.61 crore in the same period in 2015-16