Calcutta, May 25: The Employees’ Provident Fund Organisation (EPFO), which has invested more than Rs 1,000 crore in IFCI’s securities, has agreed to a debt-recast plan for the beleaguered project finance institution.
The high-coupon instruments are due to mature over the next 10 years. EPFO has accepted a cut in yields and is willing to lock in its money longer. “IFCI has agreed to pay an interest of 9.5 per cent till March 31, 2003, and 9 per cent for 10 years starting April 2003,” said Ajai Singh, the central provident fund commissioner.
Thanks to the rollover, all these securities will now mature on March 31, 2013. But for these concessions, IFCI might have defaulted on payment of interest. “IFCI paid Rs 200 crore recently, and cleared all dues,” Singh said.
“The investment and finance sub-committee of EPFO has finalised the recast plan for our investments in IFCI’s securities, and has forwarded it to the Central Board of Trustees for its approval,” Singh added.
The EPF trustees are meeting on May 31 to consider a reduction in the current interest rate of 9.5 per cent. That looks imminent, and if financial prudence prevails over political compulsions, the cut could be more than 50 basis points.
IFCI was the only spot of bother for EPFO. Singh said the EPFO corpus did not have any major non-performing assets (NPAs). “Our NPAs are around Rs 2 crore to Rs 3 crore, not big for the size of our corpus” he added.
IFCI suffered a loss of Rs 884.70 crore in 2001-02, and in the nine months ended December 31, 2002, it lost Rs 609.69 crore. It has secured similar concessions on its borrowings from other banks and financial institutions.
The project finance institution has been seeking a strategic ally to get fresh capital and to improve operations.