IFCI celebrates sixty one years of its nation building endeavour

IFCI celebrates sixty one years of its nation building endeavour today. On an occasion such as this, it is difficult to proceed without paying a tribute to what we owe to our legacy. From the perspective of ownership, IFCI was a strange entity even when it was born. Although, promoted by the Government through a legislation to step up investment in manufacturing and industrial projects, IFCI was never directly owned by the Government. Even the repeal of IFCI Act only expanded the ownership of IFCI to a wider base covering not only institutions, but also the general public. Today, nearly half of IFCI’s holding is with about a million shareholders. In the present day context, the ownership model of IFCI retains relevance as it combines the values of public welfare with that of private ownership. This is a legacy which we continue to be justifiably proud of. It is this legacy which we at IFCI wish to keep alive and extend further.

IFCI is a public financial institution and works in the regulatory environment set up by RBI, SEBI and the Department of Companies Affairs. In a long journey such as that of IFCI, it is these regulators who have exercised the necessary diligence if not in setting our milestones then at least in ensuring that we follow the straight and the narrow towards achieving those milestones.

A part of our legacy has been constituted by the eminent persons who have been at the helm of IFCI and the executives and employees who have given the best years of their life working for the betterment of this great institution. I stand today in all my humility to acknowledge the debt we owe them.

IFCI has had to go through the rough and tumble which is unavoidable in a long and for most part a lonely quest to create the foundation of much needed modern infrastructure and industry for the nation. The troubled patch beginning in the late 1990s when we for sometime were hobbled by the adversity of our financial situation is still too fresh to have been forgotten, and from which we all know that but for the timely support from the Government we would have found it difficult to recover or even survive. This makes us conscious of our larger public engagement and obligations which are perhaps the only means through which we can repay a part of what we have received from the Government.

It is a matter of some satisfaction, however, that today as we celebrate our Founder’s Day, we can say with pride that the sacrifices made by the Government, our present and former employees and other stakeholders have not been in vain. IFCI has not only recovered from the brink of collapse, but has done it so convincingly that it might be likened to hitting six sixes off a single over. We have averaged profits amounting to more than Rs. 750 crore per annum for the last three years on a balance sheet which is still struggling to reach Rs. 15,000crore mark. Our capital adequacy which was still (–)300 percent only two years ago is within reach of 20% which is about two times the regulatory norm. By recovering more than 2500crore in the last three years from NPAs, We have demonstrated ability in the resolution of our NPAs which are the envy of much larger and more established players. I have been told by a number of our foreign visitors that they haven’t seen an office and a caring and nurturing work environment like IFCI anywhere else. It is another matter that we have improved our income from the IFCI Tower by almost two times though in that process we might have earned a grudge or two as well. To cap it all, the year when the financial institutions across the world have been reeling under the impact of a deep and unprecedented crisis, has been the year IFCI has chosen to declare a dividend to our shareholders which we had not done for almost a decade. I extend our heartfelt gratitude to our Board of Directors under whose guidance it has been possible to cover such long distance in such a short time.

The question arises- where do we go from here? A flavour with our investors which refuses to go out of season is the induction of a strategic investor. We remain committed to the process but would like at the same time to top that flavour with the zing of our shall one say, by now well relished, competitive advantages. Our operations today are differentiated by a de-bureaucratized approach, an unmatched depth of understanding of corporate and project finance and our knack for targeting our efforts at achieving quick turnaround of our investor’s moneys. Alongside, we have insinuated ourselves strongly in the areas of NPA recovery and corporate advisory. Above all, the sixty year old IFCI franchise which had invariably suffered false starts has been deepened and extended by infusion of capital and talent into four separate subsidiaries namely IFCI Factors, IFCI Ventures, IFCI Financial Services and IFCI Infrastructure. All the subsidiaries show strong growth and signs of an early maturity which should give us the confidence to explore new areas like infrastructure financing on a similar model.

It is encouraging to see that our business plan founded on this understanding is working well, especially if we also take into account the challenges being thrown by the present day business environment. After more than a decade, we have begun the acquisition of fresh assets of which we have added about Rs. 3,000 crore in 2008-09. It is, however, more important by far from the perspective of our credibility in the market that we are in a position to raise fresh funds again after a similar gap of more than ten years. This means that the cycle of financial intermediation which is at the core of our operations stands restored and can begin to roll all over again. Keeping the growth of the economy, our target would be to expand our business by around 20% per annum to begin with, and this is the best number from which each of us here can take a cue as to where he should be one year from now.

A question which is being asked, often by the press, but also by others, is whether IFCI would like to avail of the option of converting into a bank. The question is perhaps a corollary of our strong performance, especially the level of regulatory capital and the fact of other development finance institutions having converted into banks. While the prospect of enjoying the privileges of being a bank is an attractive one, let us also appreciate that at this time when in the aftermath of the financial crisis, the banking architecture and regulation appear far from settled, if not having been thrown into a state of turmoil, and when we are still struggling to catch our breath after a breakneck sprint over the last two years, the question of staking a claim for the status of a bank in whatever form, is for all practical purposes still two to three years away, unless an opportunity knocks at our door too beseechingly to ignore.

And with what shall we realize our dreams. As I am given to saying on other occasions, and which I can not say very differently today, is that the dream of IFCI’s tomorrow resides not in our business plan and our strategy but in the very dreams that we have for our own selves. It is in and through us that the dream would work its way towards realization. The material that has to be worked upon is we ourselves. This, however, does not mean that there is a particular type of an IFCI employee, kind of a model, that we have to follow or conform with. In fact, at the cost of repetition, what is intended is just the opposite of each one enjoying our own difference and being engaged with it. When we brought the compartment walls within IFCI down, it was done with a view to create a space which brings this plurality together. It has also been our endeavour to do what we can as an organization, to let each one of us develop according to his or her own genius, if that is how one should put it. While there are limits on compensation, this is one area where the generosity of our great institution would be hard to beat. I wish we can all make the most of it. I am also proud to add this auditorium to the inventory of IFCI as a locus of more engaging, uplifting and enhancing, certainly more entertaining activities than this speech tonight and in times to come. Congratulations to all of you once again and Thank you.

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