IFCI plummeted 16.31 per cent to end the day at Rs 29.25 on the BSE and the NSE on Friday on equity dilution worries. This was because of the Government’s move to convert Rs 923 crore of optionally convertible debentures in the company into equity thereby increasing Government stake in the company to 55.57 per cent.
On the BSE, 2.18 crore shares were traded in the counter against the two-week average of 9.02 lakh shares. The stock hit a high of Rs 35.95 and a low of Rs 28.90 during intra-day trade.
Huge selL off
Open interest increased over 200 per cent in September series on the NSE, indicating fresh accumulation of huge short positions.
According to market watchers, the downfall was fuelled by investors selling off on concerns of dilution of the earnings per share following the conversion of Government debentures into equity at par.
The Cabinet on Tuesday approved the proposal to exercise the option by the Government to convert Rs 400 crore and Rs 523 crore OCDs held into equity. “The conversion option will be exercised immediately,” the Government release said.
Post conversion, the holding of Government including indirect stake through various banks and financial institutions controlled by it will be 68 per cent.
The latest shareholding pattern (June-end) available with the exchanges showed that foreign institutional investors are holding 12.22 per cent stake in the company while retail investors have a significant stake of 42.92 per cent.
Major stakeholders
Major shareholders include LIC (8.4 per cent), General Insurance Corporation (2.24 per cent), Tourism Finance Corporation (2.12 per cent), Macquarie Bank Ltd (1.94 per cent) and Barclays Capital Mauritius Ltd (1.34 per cent).
The small-cap company has an equity capital of Rs 737.84 crore and face value is Rs 10. During the quarter, IFCI's net profit declined about 30 per cent to Rs 93.61 crore and revenues declined to Rs 660.84 crore (Rs 764.01 crore).
This is not the first time the Government has stepped in to provide funds to IFCI to tide over its problems. The Government had earlier provided Rs 400 crore in the form of OCDs.
Later in 2002-03, as part of the financial restructuring package of Rs 5,220 crore, the Government gave IFCI Rs 523 crore as loan in the form of OCDs.