Addressing a press conference here on Friday, IFCI chairman and managing director PV Narasimham said despite low profits the board had decided maintain the track record of paying dividends. The company will have to dip into reserves to pay dividend.

Apart from industrial slowdown, the IFCI chief has attributed the poor performance to "the accumulated non-performing assets (NPAs) of the past which necessitated large provisioning having notable effect on institution's financial performance." He added that major industries in which NPAs featured most prominently were synthetic fibres, steel, basic chemicals, textiles and glassware.

The increase in NPAs, he added, was a consequence of multiple factors including slowdown in industrial growth, slack demandconditions, excess capacity in a number of industries, technological obsolescence and the loss of competitiveness in some industries.

He said that non-performing assets during the year went up by whopping Rs 2,000 crore. The total NPAs of the IFCI totalled Rs 4,000 crore which works out to be 20.85 per cent of the business assets, up from 14 per cent last year. The IFCI, he added, would try to bring down NPAs to 11-22 per cent at the end of current financial year and to 8-7 per cent in the near future.

Narasimham said Rs 308 crore was contributed from the profits for meeting provisioning norms and another Rs 300 crore was being taken out from reserves for making a total provision of about Rs 600 crore during the year. He said "we have followed the RBI guidelines in full while making provisions for sub-standard assets and used our judgments in cases where we felt that the company would be in a position to service our debts."

Half of the NPAs, he hoped, would become performing with restructuring of thecorporate currently underway. The IFCI, he said, would prompt restructuring in as many as 25 to 30 corporate. The total exposure of the institution in these companies was about Rs 1000 crore.

He further pointed out that the cost of borrowing has gone up due to the conscious policy of the IFCI to replace low-maturity funds with those having higher maturity period. This, he stressed, would help in preventing any asset-liability mismatch in future.

The IFCI chairman further said that the institution was planning to come out with a 1:1 rights issue at par to raise about Rs 350 crore in July/August.

The focus of business during the current year, he said, would be on non-traditional areas like roads, ports, information technology,consumer goods etc.

As far as 1998-99 was concerned, Narasimham said that sanctions totalled Rs 8,684 crore to 242 projects registering a growth of about 13 per cent. However, total disbursements fell to Rs 4,749.5 crore as compared to Rs 5,650.4 crore inthe previous financialyear.