New Delhi, Nov 29: Delhi-based IFCI Ltd today decided to transfer the bad assets of eight firms to its asset reconstruction firm, Asset Care Enterprise (ACE), jointly promoted with state-run Punjab National Bank.
The ailing financial institution today held a meeting on transfer of these eight accounts — Parekh Platinium, Mukerian Paper Mills, Rania Industries, Nova Iron and Steel, Hindon River Mills and Titagarh Industries — worth Rs 257 crore as per the net book value.
The aggregate outstanding of these eight firms, however, stands at Rs 1022.8 crore, IFCI officials said.
An official said the assets of these eight firms are potentially viable and the firms are located in states where stamp duty is capped or is nominal, thus restricting the transaction cost.
“Thus, the acquisition process would be smoother,” said IFCI sources.
The valuation of these firms took into account the gross and net book values of the underlying physical assets and the arrears of depreciation, he said.
Officials also said the ACE would share 80 per cent of the upside with the institution, thus resulting in cash inflows for the cash-strapped term-lending institution.
He added the institution has decided to provide an additional provision of Rs 54.5 crore for these eight assets.
IFCI today also reported a lower operational loss of Rs 99 crore in the first half period (April-Sep) of the financial year to March 2004 against Rs 413 crore clocked in the year-ago period.
IFCI has been saddled with huge bad loans as lending to large projects, specially in steel and textile sectors, has not paid off. This, coupled with payment defaults by around seven to eight well-established corporate groups, has turned it into a sick institution.
However. the government, as part of its effort to restructure the institution, has provided budgetary support worth Rs 4,697 crore to the insitution. This will enable the institution to retire high cost funds and get relief in terms of interest costs.