Govt to infuse Rs 500 cr in IFCI to improve its financial health

The Indian government has decided to infuse Rs 500 crore into state-owned IFCI to strengthen its financial health and support its upcoming restructuring. This capital infusion will likely increase the government’s stake in the company beyond the current 71.72 per cent.

The capital allocation was formalized through the first Supplementary Demand for Grants for 2024-25, passed in the Lok Sabha. Of the Rs 499.99 crore allocated, Rs 449.92 crore will be reallocated from savings within the capital budget, ensuring no additional cash outflow.

IFCI: Losses and Prior Fundraising

In the second quarter of FY24, IFCI reported a Rs 22 crore loss, with first-half losses totaling Rs 170 crore. Earlier this year, IFCI had raised Rs 500 crore by issuing equity shares to the government, marking a continued effort to stabilize its financial health.

IFCI: Restructuring and Consolidation Plans

The Ministry of Finance recently approved a restructuring plan to consolidate IFCI and its group companies, including merging entities like Stockholding Corporation of India, IFCI Factors, and IFCI Infrastructure Development into a unified entity. Subsidiaries like Stockholding Document Management Services and IFCI Venture Capital Funds will also become part of the consolidated structure.

Legacy and Role of IFCI

Established in 1948 as India’s first Development Financial Institution, IFCI has been instrumental in financing projects across manufacturing, infrastructure, and other sectors. It transitioned into a public limited company in 1993 and remains a significant player in India’s financial ecosystem.

This capital infusion and restructuring highlight the government’s dedication to revitalizing IFCI and ensuring its sustained contribution to India’s industrial and infrastructural growth.