After cutting losses by 70 per cent to Rs 259.70 crore (Rs 2.60 billion) last fiscal, Industrial Finance Corporation of India on Friday said it hopes to breakeven this fiscal, provided liabilities worth Rs 4,000 crore (Rs 40 billion) are restructured.

"We should be able to reduce our losses further. Breakeven is possible this fiscal provided the remaining Rs 4,000 crore liabilities are restructured," V P Singh, chairman, IFCI, told PTI after IFCI's 10th annual general meeting in New Delhi.

Following the government's intervention last fiscal, banks and financial institutions restructured liabilities worth Rs 8,200 crore (Rs 82 billion) by the reduction in interest rates to 9 per cent and extension of maturity period of the high-cost bonds issued by IFCI.

Some of the provident funds, including the Employees Provident Fund Organisation, had also agreed to roll over the maturity periods and reduce the coupon rates of IFCI's debts.

"We have reduced the cost of borrowing sharply to 9.25 per cent last fiscal from 12.5 per cent in the previous fiscal. We have targeted to reduce it further to 8 per cent this fiscal," Singh said.

The IFCI chief, who got four months extension till January 31, also said the FI plans to prepay costly debts after restructuring the existing liabilities.

This would enable IFCI to come out of the red and then raise resources from the market to carry on its lending.

IFCI will target the mid-corporate segments for providing fund and fee-based services.

The Delhi-based FI reduced its losses to Rs 259.70 crore last fiscal from Rs 884.70 crore (Rs 8.85 billion) in 2001-02, despite a fall in income by 36 per cent to Rs 1,438.20 crore (Rs 14.38 billion).

IFCI provided a whopping Rs 1,882 crore (Rs 18.82 billion) for doubtful and bad assets last fiscal.

The non-performing assets mounted to Rs 4,559.70 crore [Rs 45.60 billion] (or 29.5 per cent of assets) last fiscal, compared to Rs 3,897.60 crore [Rs 38.98 billion] (22 per cent) in 2001-02.

Singh said there were signs of improvement and the FI has sanctioned loans worth Rs 507 crore (Rs 5.07 billion) in the first quarter, compared to Rs 241 crore (Rs 2.41 billion) in April-June 2001-02. Most of the loan sanction was intended to restructure the debts of its clients.

The total disbursement of loans stood at Rs 434 crore (Rs 4.34 billion) in the first quarter of this fiscal, compared to Rs 149 crore (Rs 1.49 billion) in the same period of the previous fiscal.

"On completion of the restructuring of liabilities and reduction in NPAs, the credit rating of IFCI will improve significantly. This would enable IFCI to be better poised to raise resources at competitive rates and undertake substantial business in future," Singh added.