IDBI Ltd (IDBI) has reported a net profit (PAT) of Rs62.13 crore for the quarter ended December 31, 2004, 33.5 per cent higher than the PAT of Rs46.55 crore achieved during the corresponding quarter of the previous financial year. This is after making a provision of Rs3.50 crore towards income tax and factoring in a deferred tax credit of Rs7.47 crore.

The bank's Q3 operations resulted in a profit before tax (PBT) of Rs58.16 crore as against Rs52.41 crore during October-December 2003. Total Q3 income was Rs1,259.08 crore, against Rs1,664.32 crore earned in the corresponding quarter of FY04. Total expenditure (excluding provisions and contingencies) was marginally lower at Rs1,194.77 crore (Rs1,222.96 crore).

IDBI's aggregate assets increased by 2 per cent (year-on-year), from Rs62,998 crore as at end-December 2003 to Rs64,199 crore as at December 31, 2004, which includes outstanding business assets of Rs60,389 crore. Q3 EPS (non-annualised) for the reporting quarter works out to Rs0.95 as against Rs0.71. IDBI continued to maintain a sound capital base as represented by its capital adequacy ratio (CAR); as against the RBI stipulation of 9 per cent for total CAR, the CAR at end-December 2004 stood at 19.2 per cent, of which Tier-I capital stood at 15.9 per cent.

The first financial year of the banking company will end on March 31, 2005 (6 months) while the erstwhile IDBI had an extended accounting period of 18 months last year, up to September 30, 2004. Q3 aggregate sanctions and disbursements under all products (including funded interest term loan — FITL) were Rs5,442 crore (up 352 per cent) and Rs1,580 crore (down 19.6 per cent) respectively.

For the nine months ended December 2004, aggregate assistance sanctioned (including FITL) stood at Rs12,109 crore (up 239.3 per cent) compared to Rs3,569 crore for the nine months ended December 2003. Disbursements (including FITL) during the same period registered a growth of 2.8 per cent to Rs3,710 crore (Rs3,609 crore). Net of FITL, aggregate assistance sanctioned was up 291.1 per cent, while disbursements were up by 31.1 per cent during the first nine months of FY05.

Sanctions to the infrastructure sector during April-December 2004 increased to Rs3,462 crore (Rs1,314 crore) and accounted for 28.8 per cent of total sanctions for the period. Of this, assistance aggregating Rs1,160 crore was sanctioned during October-December 2004. But disbursements to the infrastructure sector were at Rs643 crore, accounting for 17.6 per cent of total disbursements during April-December 2004, lower than in the corresponding period of the previous year (Rs1,099 crore). Q305 disbursements to infrastructure constituents were at Rs215 crore.

Resources
IDBI raised resources aggregating to Rs2,131 crore from the domestic market and abroad during Q305. These comprised rupee resources of Rs1,044 crore and foreign currency (FC) resources equivalent to Rs1,087 crore. The major constituents of rupee resources were Omni Bonds (on private placement basis) of Rs943 crore and other borrowings aggregating Rs101 crore. The FC borrowing comprised a five-year US dollar denominated Euro-bond issue of $250 million, contracted in December 2004 at a fine coupon of 5.13 per cent per annum. This was the first external commercial borrowing undertaken by IDBI after its transformation into a banking company on October 1, 2004.

During April-December 2004, resources aggregating Rs6,262 crore were raised from the wholesale and retail market in India and abroad. These comprised rupee resources of Rs5,175 crore including Flexibonds (Rs1,586 crore) and Omni Bonds (Rs2,646 crore, including Rs1,256 crore under the reinvestment scheme). Resources were also mobilised under 'Suvidha' Fixed Deposits (Rs464 crore), Commercial Paper (Rs385 crore) and other instruments aggregating to Rs94 crore. FC resources equivalent to Rs1,087 crore were also mobilised during the period. In comparison, an amount of Rs10,036 crore was mobilised from all sources during the first nine months of 2003-04.

The cost of incremental rupee borrowings during April-Dec 2004 at 6.16 per cent per annum was lower by 46 basis points as compared to 6.62 per cent per annum obtaining during April-Dec 2003. The average maturity of such borrowings during this period was 4.01 years (4.32 years).

Outlook
Despite the moderating influence brought about by uneven monsoons and rising fuel prices, the Indian economy displayed commendable resilience, registering a growth in real GDP of 7 per cent during the first half of FY05 as compared with an increase of 6.9 per cent in the first half of FY04. Robust contribution from industry (particularly manufacturing), services and exports fashioned this overall growth in the economy. The consensus is that unless there are totally unexpected shocks going forward and after factoring in the localised impact of the Tsunami disaster, FY05 is likely to see a mature GDP growth in the range of 6 to 6.5 per cent after a year of solid expansion in FY04.

From the Bank's perspective, the buoyancy in the industrial investment climate and upswing in business confidence indicators have already translated into a robust pick-up in sanctions during Q305, and are expected to feed through to disbursed volumes in the foreseeable future. There is cautious optimism that an enabling business environment, complementary policy support and benefits accruing from its considered diversification into banking would orchestrate an enduring improvement in IDBI's performance, in the quality of its portfolio and its brand equity during FY05 and beyond.

Merger
Preparatory activities for the merger of IDBI Bank Ltd into IDBI Ltd are proceeding in sync with the roadmap drawn up for the purpose. The merger was approved 'in principle' by the boards of the erstwhile IDBI and IDBI Bank on July 29, 2004, and was subsequently ratified by the Board of IDBI Ltd, the new banking company, in October 2004. The new IDBI board, at its meeting held on January 20, 2005, approved the scheme of amalgamation, according to which the central government's shareholding in IDBI will be at around 51.3 per cent post-merger.

The appointed date for the merger has been fixed as October 1, 2004. The scheme of amalgamation — subject to its approval by the shareholders of both companies — will become effective on receipt of approval of the Reserve Bank of India. IDBI Ltd has convened an extraordinary general meeting (EGM) on February 23, 2005, to seek the approval of its shareholders in this regard. The entire process is expected to be completed by the end of FY05.