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IDBI up on restructuring package
June 12, 2003 12:50 IST
Market optimism over restructuring package fuels IDBI 12-6-2003 IDBI was the subject of institutional buying today as the market was abuzz with talk that the term lender's restructuring package has been finalised. The scrip of Industrial Development Bank of India (IDBI) sprang forth 9.83% to Rs 35.20 by 11:33, as a result. Volumes were large at 9.35 lakh shares on BSE by 11:33 IST. The scrip has now risen 99% from Rs 17.70 on 8 May 2003. As per market talk, Salomon Smith Barney (SSB) was active on the counter today.
Many in the market now feel certain that the restructuring packages for state-run financial institutions IDBI and IFCI have been finalised by the Centre. IDBI, last year, was plagued by reports that it was under financial stress and the Centre had then set out to bail out the big lender whose funds were caught in many a core sector dead-end.
But things are looking up for the institution now as it has started receiving old debts from sick companies in the steel and textile industries, which are witnessing a revival. There is also buzz that the government may grant the financial institution permission to transform itself into a universal bank.
IDBI has already forayed into a key segment like the housing finance business. It acquired the entire shareholding of Rs 49.98 crore in Tata Homefinance on 2 June 2003.
The Securitisation Act enacted in November 2002 has proved a boon to term-lending institutions. These can now attach assets of defaulting borrowers without having to go to the court for the purpose.
Last week, there were reports that the company, in a bid to recover Rs 1,459 crore under the Securitisation Act, issued notices to 41 defaulters. IDBI has already seized the assets of Suman Motels and Ganesh Benzoplast under the Act. IDBIs non-performing assets (NPAs) stood at Rs 4,287 crore as on 31 March 2003.
IDBI is planning to take action against 31 borrowers, involving a principal amount of Rs 822 crore. Of these, 20 borrowers have approached for amicable settlement of dues and a few of them have submitted one-time settlement (OTS) proposals.
For Q4 ended 31 March 2003, IDBI registered a 15% rise in net profit to Rs 209 crore (Rs 182 crore) on a marginal 0.6% increase in total income to Rs 1,902 crore (Rs 1,891 crore). The board has also recommended a dividend of Rs 1.50 per share for the FY 2002-03.
As on 31 March 2003, promoters held 58.47% stake in the company, while the public and institutions held 16.50% and 19.78%, respectively.
Source: www.capitalmarket.com
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