New Delhi: Government plans to hike its stake in IFCI Ltd to 51 per cent by infusing Rs 60 crore in the country's oldest financial institution. Even though the government had a majority shareholding in the term lender, at present the stake is nearly 48 per cent on account of inclusion of preference share capital.
Finance Ministry would seek Cabinet approval to hike its stake in the IFCI to 51 per cent by pumping in Rs 60 crore, and make it a "government company", sources said. To increase its stake, government is looking to acquire preference shares from existing stakeholders of IFCI, they added.
In this regard, the Department of Financial Services has floated a draft Cabinet note to Corporate Affairs and Law Ministries, among others. Approval would be sought from the Cabinet Committee on Economic Affairs (CCEA). At the end of March 2014, government held 47.93 per cent stake in IFCI. Under provisions of the new Companies Act, many of whose provisions came into force from April 1, IFCI is not a government company.
As per Section 2 (45) of the Act, a government company means any company in which not less than 51 peer cent of the paid-up share capital is held by the central government or state government or governments, among others. After getting Cabinet approval in August 2012, the government had increased its stake in IFCI to 55.53 per cent by converting Rs 400 crore worth convertible debentures and Rs 523 crore worth optionally convertible debentures into equity.
However, IFCI's total paid-up capital of about Rs 1,925 crore comprised Rs 1,662 crore as equity capital and nearly Rs 264 crore as preference share capital. Sources said that after inclusion of the preference share capital, government's shareholding is around 47.93 per cent. IFCI or the Industrial Finance Corporation of India was set up in July 1948. In 1993, the entity was changed from a statutory corporation to a company under the Companies Act, 1956. Later the name was changed to IFCI Ltd from October 1999.
