New Delhi, June 9: The Industrial Finance Corporation of India (IFCI) is expected to record a seven to ten per cent growth in net profit to around Rs 390 crore for the year ended March 1997.

The growth rate is sharply lower than the 30 per cent spurt recorded in 1995-96, when net profit soared to Rs 354 crore from Rs 274 crore in 1994-95.The IFCI board is meeting on June 26 to finalise the accounts.

IFCI chairman and managing director KD Agarwal refused to comment on the net profit figure for 1996-97. "The accounts are still being finalised," he said.Despite the slowdown in profit growth, the average annual growth rate in net profit over the last three years will stand at over 40 per cent.

The disbursement growth rate also came down to 13 per cent in 1996-97. Disbursements grew to Rs 5,200 crore from Rs 4,600 crore in 1995-96. The past three years' average growth in disbursements is above 40 per cent.The three-year average growth rate in sanctions remains at more than 35 per cent despite a fall during 1996-97 to Rs 7,200 crore from more than Rs 10,300 crore in 1995-96.

"Tight liquidity position and high cost of money were responsible for the slowdown in the profit growth," a top-ranking IFCI official said.

IFCI expects to better its performance in the current financial year with lowering of the lending rates. IFCI Financial Services, the new subsidiary for merchant banking business, is expected to contribute towards improvement in the bottomline.

The company plans to raise more than Rs 5,000 crore from the market through private placement of bonds, foreign currency loans from international agencies and a public issue of bonds later in the year.

A Rs 200-crore private placement of bonds is already in the market. The step-up liquid bonds have a tenure of three years with a put option after every year. The coupon rate for a one-year investment is 12 per cent and 12.5 per cent for two years.

IFCI is, however, not in a hurry to tap the market with a public issue of bonds.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.