Government to Infuse ₹500 Crore in IFCI

The Government of India has decided to inject ₹500 crore into the state-owned Industrial Finance Corporation of India (IFCI) to support its financial stability amidst ongoing restructuring. This is expected to raise the government’s stake in IFCI beyond the current 71.72%, as reported in September 2024.

Capital Allocation Through Budgetary Measures

This capital infusion was formalised under the first Supplementary Demand for Grants for 2024-25, passed in Lok Sabha. A total allocation of ₹499.99 crore was made for IFCI’s equity, out of which ₹449.92 crore will be sourced by reallocating savings from other budget sections, ensuring no additional cash outflow.

Restructuring & Consolidation Plans

IFCI, originally established as a statutory corporation in 1948, has undergone multiple structural changes over the decades. As part of its revival strategy, the Department of Financial Services (DFS) approved a major consolidation plan in November 2024. This includes the merger of several group companies with IFCI, such as:

• StockHolding Corporation of India Ltd
• IFCI Factors Ltd
• IFCI Infrastructure Development Ltd
• IIDL Realtors Ltd

Subsidiaries like StockHolding Document Management Services Ltd and IFCI Venture Capital Funds Ltd will continue as part of the consolidated structure.

Financial Performance & Challenges

Despite these efforts, IFCI has faced challenges. In the second quarter of FY24, the company reported a net loss of ₹22 crore, accumulating to ₹170 crore in losses during the first half of FY24. Earlier this year, IFCI had raised ₹500 crores through equity issuance to the government, signalling efforts to stabilise its operations.

As of 9:55 AM today, IFCI Ltd shares were trading at ₹61.04, showing a marginal increase of 0.11% for the day, with a 110.48% growth year-to-date and a 116.84% rise over the past year.

Evolution of IFCI

Initially founded to provide long-term finance for industries, IFCI transitioned into a company under the Indian Companies Act in 1993. The government’s stake in IFCI surpassed 51% in 2015, reinstating its status as a public sector enterprise.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.