Government to infuse over Rs32-crore capital into loss-making NFDC
17 Sep 2010
The union cabinet has approved a revival plan of around Rs32.40 crore for the loss-making National Film Development Corporation Ltd (NFDC), involving additional equity infusion and debt restructuring.
Under the plan, the government will infuse additional equity of Rs3 crore and convert the outstanding government loan of Rs19.77 crore along with accumulated interest of Rs8.63 crore into equity.
A government release today said NFDC will use the fresh equity of Rs3 crore and internal accruals/recovery of outstanding dues of Rs2.95 crore to finance its computer hardware and software, establish an `Art House Digital Exhibition Network' and renovate/upgrade its properties.
The conversion of loans and interest outstanding thereon into equity will help NFDC out of the heavy interest burden and loan liability and help consolidate its balance sheet, the release sad.
The capital infusion will increase NFDC's net worth positive with paid-up and authorised capital to Rs45.40 crore and Rs45.39 crore, respectively.
The National Film Development Corporation Ltd (NFDC) was set up in 1975 with the objective to plan, promote an organised an integrated development of the film industry. NFDC has so far funded/produced around 300 films in over eighteen Indian languages.
Once a profit making PSU, NFDC started incurring losses after 2002-03 with the entry of private channels that led to splitting of advertisement revenue from Doordarshan, which was a major source of its income. Also a substantial part of its advertisement revenue remained un-recovered after a long litigation process. This also eroded its paid-up capital and its net worth turned negative.
NFDC is surviving on a working capital loan of Rs19.77 crore provided by the government. The revival plan, prepared with the assistance of the SBI CAPS, has since been modified by the Board for Reconstruction of Public Sector Enterprises (BRPSE).