IFCI forms ARC with Rs 200 million

Mumbai: The Industrial Finance Corporation of India (IFCI) has decided to form an asset reconstruction company (ARC) with an authorised capital of Rs 200 million. The ARC company is intended to provide focussed attention to the process of recovery of non-performing assets (NPA), thereby reducing the overall NPA level of the company and strengthening the fundamentals. The proposal to set up ARC was approved by IFCI board directors at its meeting held on 27 March 2002.

The main object of the company will be to acquire, restructure and dispose sick companies. It will also manage the loan assets of banks, financial institutions or other lending bodies and corporates that have turned bad. Some banks and institutions have shown interest in participation in the company and IFCI is engaged in discussions with them to finalise their participation.

Foremost Factors Ltd (FFL) is an unlisted company engaged in the business of factoring, domestic as well as export. It is controlled by IFCI along with Bank of America Overseas Corporation (BAOC) and the Mohan group. IFCI is the largest shareholder of FFL (36.25 per cent of the total share capital). BAOC, holding 26.25 per cent of the share capital of FFL, has offered to IFCI shares at Rs 2.14 per share. Consequently, the IFCI board of directors has decided to acquire 27,18,750 equity shares of FFL, aggregating to Rs 58,18,125. After this acquisition, the total stake of IFCI in FFL will become 49.84 per cent.

IFCI, on 20 February 2002, executed a negotiated deal with IDBI for the sale of 5,51,000 equity shares of Discount and Finance House of India at Rs 235 per share (2.75 per cent of the paid-up capital) and 15,05,400 equity shares of the Securities Trading Corporation of India at Rs 135 per share (3.01 pre cent of the paid-up capital).

It also executed a negotiated deal with Yield Securities and Credits Pvt Ltd for the sale of 16,46,579 equity shares of Indorama Synthetics India Ltd (IRSL) (0.99 per cent of the paid-up capital) and with Virgin Securities and Credits Pvt Ltd for the sale of 16,46,580 equity shares of Indorama Synthetics India Ltd (0.99 per cent of the paid-up capital) at Rs 12.0445 per share, in terms of the share purchase agreement dated 26 March 2001 between IFCI and O P Lohia, the promoter of IRSL.