On his immediate priorities:

There are three-four issues facing all institutions, perhaps in greater gravity to IFCI than others. The challenge today is to raise resources creatively so that your margins don't get squeezed.

Secondly, the investment market is somewhat dull. But for infrastructure, other areas are not moving. So there is need to develop new products and explore new areas for new business. Given the type of strengths and weaknesses of IFCI, we will see which areas we should go into that can bring results in a relatively shorter period.

It has been done in the last three-four years within the Corporation. But the situation has become more competitive and the climate has become more sluggish. So we need extra efforts in that direction. The third area which is causing us concern isNPAs. There we are ahead of of other institutions.

On NPAs and high cost of borrowings:

At this point, I can't give an answer to this. I know these problems are there. But one can take the concrete steps only when the problem is recognised. Either you go in for some specific products which will give low cost funds. There are ways and means of doing this.

On steps to improve asset quality:

One thing that IFCI needs very badly is good loans. In certain groups, our exposure has been very high. We will look for opportunities to make some of these good loans available to others. it will make available more funds at cheaper rates. Secondly, IFCI's exposure in these companies will come down which will enable us to fund more groups.

We will identify suitable candidates so that our exposure in the top companies is brought down to what can be considered a very reasonable level.

The basic idea is to reduce our exposure to these groups so that it remains comfortable. But nobody will accept a badloan. So this has to be necessarily in good loans. It is one way of recyling, get low cost funds and get a premium, This is one option that can be done immediately.

There could be many other such options. For example, ICICI has said that it will take the initial credit risk and once the project is implemented, offload it to somebody who is not in a position to take that much of a credit risk. Though that is a possibility but at this point, IFCI is not in a position to undertake that high a risk. Maybe we have such strength later.

The third option is derivatives where you give a guarantee and I give a counter-guarantee with the result that it gets balanced. That is a separate issue altogether. It doesn't diminish your balance sheet or reduce your risk but it widens the market. That is the third stage of development.

On funding M&A:

I will not say that we will not fund, or that it is a business that is a taboo. But obviously we will not fund any M&A without ascertaining the motive. At the sametime, just because a corporate comes up with a proposal of an attractive interest rate and security and does not specify a clear motive, I don't think we will be inclined to come forward.

Let us remember what may start as a hostile takeover may end up as a happy marriage. We have seen that in the case of Raasi Cement.

As long as M&As are done in a transparent manner that takes into consideration the interests of all stakeholders, takes into consideration appropriate transfer pricing and if there is adequate security and comfort level in management, I don't see M&As as a taboo.

On whether IFCI will fund hostile takeovers:

We are talking of liquidity and cash to rich groups. Suppose I give Rs 300 crore to a corporate. It may use that cash to take over and bring in some other cash to bring in the assets. It is the total cash flow that we have to see. It is very difficult to distinguish that. Those decisions have to be taken on a case to case basis. The very word hostile takeover is verysubjective.

If somebody else believes that he can give better services to a company, then what do you do. Once you accept the market economy and competition, there must be a demand on the corporates to perform. If you just sit pretty thinking nobody should touch you, where will the guiding force to perform better come from? The protection for good performers should come from the shareholders' confidence in your results. So it is not a funding issue to my mind.

On the conflicting roles of commercial funding & nationalist goals:

Over a period of time, I don't think the interest of the lender and the interest of the shareholders would invariably differ. In the short term, if there is asset or cash flow, everybody wants to have his share of it as quickly as possible, so it would appear to be a conflict of interest.The lender's interest is to get back the money. And if the company's balance sheet improves either by merger, or by improved market share or by premium, then the value of security availableto us also improves. So the lenders' comfort is no way less by a good merger. From the shareholders' point of view if the ratio vis-a-vis any other particular shareholder groups is considered to be fair.

I strongly feel that this will improve the optimum utilisation of the assets already created in the country. Secondly, the threat of M&A will keep up the pressure upon the companies to perform. When they perform, the scrip prices will go up which will make it more difficult for others to take over. So looking at all these aspects, corporates should constantly review the opportunities available for them for such types of synergies in expansion, not only by setting up of projects, but by M&A and restructuring their businesses in the core competency areas. So we have to carefully look that if there is a desirable activity, it doesn't matter whether I fund it or not, somebody else will fund it. Or else, the corporates will fund other ways and means.

On internal restructuring:

The Arthur Andersonreport on restructuring is already under consideration for some time . We have over the years some inflexible policies, systems and structures and social issues also come into play before moving people. So several things are involved. I feel, assesment has to be a very continuous process and we have to access what changes have become due every three years and make those changes that become due over time.

On funding for medium size corporates:

How many Rs 100 crore companies are there? And who decides if what they need is genuine. Banks and institions have to look into not only the creditworthiness, but also the requirement and the end use of the funds even though it may seem perfectly justified from the promorters' point of view. There is a lot of misunderstanding on the bankers' assesment versus the promoters' requirement.

On getting into banking:

IFCI board at one point of time was very particular to have a bank. Then RBI too was very keen to encourage private sector banks. Then thethinking seems to have changed. One doesn't know how long these banks will take to reach the level of traditional banks and there are other issues involved like what kind of synergy should come with the parent organisation. We will consider entry into banking but that is not on my priority. The name of the game now is consolidation.