Sidbi wants Govt to convert debt into equity

Small Industries Development Bank of India, Sidbi, approached Government seeking conversion of the latter’s existing debt exposure into equity, said the organisation’s Chairman & Managing Director, Sushil Muhnot. The proposal seeks the conversion of Government debt exposure of about Rs 2,500 crore in Sidbi into equity, Muhnot said.

If the Government agrees to the conversion, it would enable Sidbi to do more equity financing, he told Business Line here. This is because a higher equity would imply increased net worth. This, in turn, would ensure higher quantum of equity financing to medium, small and micro enterprises, he pointed out.

The paid-up capital of Sidbi, which is a Government-owned entity at present, is Rs 450 crore.

To raise funds

Sidbi also plans to raise Rs 13,500 crore during the current fiscal through a mix of bonds and other instruments to fund its business activities. The financial institution is likely to disburse over Rs 40,000 crore this fiscal.

In fiscal 2012-13, Sidbi had reported a net profit of Rs 837 crore. This reflected a 47.6 per cent increase over the net profit of Rs 567 crore in the previous year.

Sidbi’s total income grew 17.23 per cent in 2012-13 to Rs 5,401 crore (Rs 4,607 crore).

srivats.kr@thehindu.co.in

Source: thehindubusinessline