India Infrastructure Finance Company (UK) Ltd is expected to turn net worth positive this year and the subsidiary should be in a position to pay dividend next year, IIFCL managing director P R Jaishankar said. To strengthen financial health, India Infrastructure Finance Company Ltd (IIFCL) infused USD 25 million into its London-based subsidiary last year.
Net worth was eroded due to high non-performing assets but aggressive recovery and resolution drive has made the company profitable for the past few years. Last financial year, the company posted a profit of USD 19 million.
The company realised USD 97 million from recoveries and resolution last year and it should be around the same level during the current financial year, Jaishankar, who happens to be chairman of the IIFC(UK) said.
“Based on the renewed focus and efforts of the management, the company returned to profitability in FY20, after making losses for 2 consecutive years with focussed approach on business and recoveries. The net profit of the company in FY22 has increased by over 6 times to USD 19.09 million from USD 2.86 million in FY20,” he said.
To further enhance the performance and profitability of the company, he said, it has formulated a medium term strategy to drive its future growth and further augment the infrastructure sector financing in the country.
RBI has approved the extension of validity of its line of credit of USD 5 billion by 3 years till March 2023, out of which, the company has utilised USD 2.5 billion. All the borrowings of the company from this line of credit of RBI are backed by the government guarantee.
Apart from RBI line of credit, he said, IIFC (UK) is continuously exploring new sources of funds with a view to further supplementing financial resources for infrastructure development in India, he said. State-owned IIFCL had in 2008 set up a London subsidiary with the objective of lending to Indian companies implementing infrastructure projects in India, or to co-finance their External Commercial Borrowings (ECBs) for such projects, solely for the capital expenditure outside India.
So far, the company has made cumulative gross sanctions of USD 4.414 billion and disbursements of USD 2.252 billion. Talking about IIFCL, he said, the company aims to sanction loans worth Rs 30,000 crore in FY23, highest ever loan sanction in any year.
The company has transformed itself from being a last mile lender to a preferred financier for infrastructure project developers across roads, airports, ports and renewable energy sector, he said.
“From operational loss with high NPAs a few years ago, the company earned a profit of Rs 514 crore in FY22. Improved both return on equity and return on assets. With the improvement in financials, the net worth has increased from Rs 10,306 crore in FY20 to Rs 12,273 crore at present,” he said.
With respect to improvement in asset quality, he said that non-performing assets have come down from about 10 per cent in FY20 to 3.65 per cent on a net basis.
The percentage of ‘A’ and above rated assets increased from 35-40 per cent (March 2020) to about 65 per cent (March 2022), he added.