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HISTORY OF IFCI

At the time of independence in 1947, India's capital market was relatively under-developed. Although
there was significant demand for new capital, there was a dearth of providers. Merchant bankers and
Underwriting firms were almost non-existent. And commercial banks were not equipped to provide
long-term industrial finance in any significant manner.

It is against this backdrop that the government established The Industrial Finance Corporation of India
(IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the
long-term finance needs of the industrial sector. The newly-established DFI was provided access to
low-cost funds through the central bank's Statutory Liquidity Ratio or SLR which in turn enabled it to
provide loans and advances to corporate borrowers at concessional rates.

LIBERALIZATION-CONVERSION INTO COMPANY IN 1993

By the early 1990s, it was recognized that there was need for greater flexibility to respond to the changing
Financial system. It was also felt that IFCI should directly access the capital markets for its funds needs. It
is with this objective that the constitution of IFCI was changed in 1993 from a statutory corporation to a
Company under the Indian Companies Act, 1956. Subsequently, the name of the company was also
changed to "IFCI Limited" with effect from October 1999.

IT’S FOCUS

Until the establishment of ICICI in 1956 and IDBI in 1964, IFCI remained solely responsible for implem- -entation of
the government’s industrial policy initiatives. It made a significant contribution to the moder-nization of Indian
industry, export promotion, import substitution, pollution control, energy conservation and generation through
commercially viable and market- friendly initiatives. Some sectors that have dire-city benefited from IFCI include:
• Agro-based industry (textiles, paper, sugar)
• Service industry (hotels, hospitals)
• Basic industry (iron & steel, fertilizers, basic
chemicals, cement)

• Capital & intermediate goods industry (electronics,
synthetic fibers, synthetic plastics, miscellaneous
chemicals) and Infrastructure (power generation,
telecom services)

IFCI's ECONOMIC CONTRIBUTION

IFCI’s economic contribution can be measured from the following: -

1. Cumulatively, IFCI has sanctioned financial assistance of Rs 462 billion to 5707 concerns
and disbursed Rs 444 billion since inception.
2. In the process, IFCI has catalyzed investments worth Rs 2,526 billion in the industrial and
infrastructure sectors.
3. By way of illustration, IFCI’s assistance has been helped create production capacities of:
6.5 million spindles in the textile industry
7.2 million tons per annum (tpa) of sugar production
1.7 million tpa of paper and paper products
18.5 million tons tpa of fertilizers
59.3 million tpa of cement
30.2 million tpa of iron and steel
32.8 million tpa of petroleum refining
14,953 MW of electricity
22,106 hotel rooms
5,544 hospital beds
8 port projects, 66 telecom projects and 1 bridge project.
4. The direct employment generated as a result of its financial assistance is estimated at
almost 1 million persons.
5. IFCI has played a pivotal role in the regional dispersal of industry -- 47% of IFCI’s
assistance has gone to 2,172 units located in backward areas, helping to catalyze
investments worth over Rs1, 206 billion.
6. IFCI’s contribution to the Government exchequer by way of taxes paid is estimated
at Rs9 billion.
7. IFCI has played a key role in the development of cooperatives in the sugar and textile
sectors, besides acting as a nodal agency in both sectors.371 cooperative societies in these
sectors have been assisted by IFCI.
8. IFCI has promoted Technical Consultancy Organizations (TCOs), primarily in less
developed states to provide necessary services to the promoters of small- and
medium-sized industries in collaboration with other banks and institutions.
9. IFCI has also provided assistance to self-employed youth and women entrepreneurs under
its Benevolent Reserve Fund (BRF) and the Interest Differential Fund (IDF).
10.IFCI has founded and developed prominent institutions like:
o Management Development Institute (MDI) for management training and
development
o ICRA for credit assessment rating
o Tourism Finance Corporation of India (TFCI) for promotion of the hotel and
tourism industry
o Institute of Labor Development (ILD) for rehabilitation and training of displaced
and retrenched labor force
o Rashtriya Garmin Vikas Nidhi (RGVN) for promoting, supporting and
developing voluntary agencies engaged in uplifting rural and urban poor in east
and northeast India.

11.IFCI, along with other institutions, has also promoted:
o Stock Holding Corporation of India Ltd. (SHCIL)
o Discount and Finance House of India Ltd. (DFHI)
o National Stock Exchange (NSE)
o OTCEI
o Securities Trading Corporation of India (STCI)
o LIC Housing Finance Ltd.
o GIC Grih Vitta Ltd., and
o Bio-tech Consortium Ltd. (BCL).
12. IFCI has also set up Chairs in reputed educational/ management institutions and
universities.

13. A major contribution of IFCI has been in the early assistance provided by it to some of
today’s leading Indian entrepreneurs who may not have been able to start their enterprises
or expand without the initial support from IFCI.
FINANCIAL PRODUCTS IT SERVES

IFCI offers a wide range of products to the target customer segments to satisfy their specific financial needs.
The product range includes following credit products:

• Short-term Loans (up to two years) for different short term requirements including bridge loan,
Corporate Loan etc
• Medium-term Loans (more than two years to eight years) for business expansion, technology up-
gradation, R&D expenditure, implementing early retirement scheme, Corporate Loan, supplementing
working capital and repaying high cost debt
• Long-term Loans (more than eight years to up to 15 years) - Project Finance for new industrial/
infrastructure projects Takeout Finance, acquisition financing (as per extant RBI guidelines / Board
approved policy), Corporate Loan, Securitization of debt
• Structured Products: acquisition finance, pre-IPO investment, IPO finance, promoter funding, etc.
• Lease Financing
• Takeover of accounts from Banks / Financial Institutions / NBFCs
• Financing promoters contribution (private equity participation)/subscription to convertible warrants
• Purchase of Standard Assets and NPAs

The product mix offering varies from one business/ industry segment to another. IFCI customizes the product-
mix to maximize customer satisfaction. Its domain knowledge and innovativeness make the product-mix a key
differentiator for building enduring and sustaining relationship with the borrowers.

TARGRT BUSINESS SEGMENT

Traditionally, IFCI has been meeting the changing requirements of the clients by endeavoring to devise
various schemes and financial products for multiple industry sectors. Major Financing Schemes of IFCI
included Project Financing and Financial Services mainly to the manufacturing industry along with a
diversified industrial portfolio.

1. Public Sector Undertakings
2. Manufacturing industry
3. Infrastructure projects
4. NBFCs
5. Participation in Private Equity
6. Promoter funding
7. Nodal Agency for Monitoring of SUGAR DEVELOPMENT FUND (SDF) loans

CORPORATE ADVISORY & INFRASTRUCTURE SERVICES

At a time, when India is throwing up investment avenues in newer sectors and projects, there is a critical need
to provide specialized advisory services to the Indian Corporate Sector in their effort towards Industrial
Advancement. IFCI with its team of seasoned professionals and rich experience of over six decades in the
financial sector is uniquely positioned to fulfill this need. As a catalyst of Industrial growth, IFCI provides the
following Advisory Services:

• Investment appraisal of Navratna (most valued public sector companies) Companies.
• Project Conceptualization and related services, including Guidance in relation to Selection of Projects,
Preparation of feasibility studies, DPR, Capital Structuring, Techno-economic Feasibility, Financial
Engineering, Project Management Design etc.
• Credit Syndication including preparation of Information Memorandum, Syndication of
domestic/foreign loans, Post Sanction follow-up, Assistance in legal documentation etc.
• Documentation of various project documents.

INFRASTRUCTURE ADVISORY

IFCI offers a range of services to the Infrastructure Sector, with specific emphasis on roads, ports, power and
urban infrastructure. Total solutions catering to the specific needs of clients, starting from the stage of
investment identification to financial closure are provided.

The services provided in the Infrastructure Sector include:

• Facilitation of Credit Documentation.
• Due Diligence.
• Agreements & Document Review/Advice.
• Pre-Investment Review.
• Project Conceptualization and Feasibility Studies.
• Risk Allocation, Assessment & Reasonableness of Cost.
• Advise on Financing Options – Sources, Cost & Risk.
• Financial Analysis & Modeling – Scenario Analysis.
• Potential JV/Partner Profiling.
• Negotiating Support for Equity Buy In.
• Project Evaluation.
• Credit Syndication – Domestic & Overseas.
• Arranging Deferred Payment Guarantee, ECB.
• Placement of debt & equity.
• Capital Market Advisory Services.

MONITORING AGENCY FOR PUBLIC ISSUES

As per the SEBI (Disclosure & Investor Protection) Guidelines, 2000, in case of issues exceeding Rs.500
crore, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by one of
the financial institutions.

IFCI offers its services as Monitoring Agency for the same:

• Carrying out of Post-Issue due diligence;
• Ascertaining whether the utilization of issue funds has been made for the purposes and in a
manner as envisaged by the Offer Document;
• Preparation of Monitoring Report as per the format specified at Schedule-XIX of the above
guidelines;
• Submission of the report to the SEBI on a half-yearly basis, till the completion of project, for the
purposes of record.

RESTRUCTURING ADVISORY SERVICES
Advisory Services to corporate and government clients comprising financial restructuring, operational
restructuring, cost-structure studies and process analysis & improvement:

 Organizational Structural Changes
• Buy/Sell Advisory
• Mergers, Joint Ventures and Alliances
• Privatization
• BID PROCESS MANAGEMENT