NEW DELHI: The government has chalked out a turnaround plan for the National Film Development Corporation (NFDC) that includes a capital infusion of Rs 30 million and conversion of debt into equity.
The Union Cabinet on Thursday approved the revival plan. The package would include the conversion of the outstanding government loan of Rs 197.7 million, along with accumulated interest of Rs 86.3 million on it, into equity.
The fresh infusion of equity of Rs 30 million along with internal accruals/recovery of outstanding dues of Rs 29.5 million will be used by the Corporation to finance its computer hardware and software, establish an Art House Digital Exhibition Network and renovate/upgrade their properties.
The conversion of loans into equity and interest outstanding thereon will rid the Corporation of the heavy interest burden and liability to repay the loan. It will further help them in cleaning up the balance sheet and start afresh.
The net worth of the Corporation will turn positive and the paid up and authorized capital of NFDC will increase to Rs 454 million and Rs 453.9 million respectively.
The NFDC expects to commence making profits from 2010-11 onwards. A higher level of equity in the Corporation will enable it to fulfill its mandate of promoting the growth of Indian Cinema.
NFDC was incorporated as a public sector undertaking in 1975 with the objective to plan, promote and organise an integrated and efficient development of the film industry of the country in accordance with the economic policy and objectives laid down by the Central Government from time to time. Accordingly, NFDC has funded/ produced over 300 films in 18 Indian languages. NFDC commenced production over the last two years and produced eight films.
The NFDC also won one award in the National Film Awards for 2009 announced yesterday - Konkani film Palatadcho Munis by director Laxmikant Shetgaonkar.
However, 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.
A substantial part of its advertisement revenue was litigated and remained un-recovered. As a result, the paid up capital of the Corporation got eroded and it landed into financial crisis with its net worth dipping to negative. The Corporation had lo keep its operations afloat with a working capital loan of Rs 197.7 million provided by the Government.
However, since the performance of the Corporation did not improve, a revival plan was prepared with the assistance of SBI Caps, which contemplates redefining of the business profile of NFDC, infusion of fresh equity and conversion of the Government loan into equity. The revival plan was examined by the Board for Reconstruction of Public Sector Enterprises (BRPSE) and it made various recommendations for revival of NFDC.
The accumulated losses of the Corporation as on 31 March 2009 stood at Rs 276.2 million. An amount of just over Rs 367.5 million was owed to NFDC by advertisement agents, and it had lodged cases against 16 such companies.
Meanwhile the Corporation hopes to reduce its manpower by 30 employees in the near future in a move to cut costs. The Corporation had in December 2008 reduced its manpower to 139 after offering Voluntary Retirement Scheme to seventy employees by paying them Rs 70 million. This has resulted in an annual saving of Rs 20 million.
The Information and Broadcasting Ministry had given the NFDC a grant-in-aid of Rs 120 million for VRS.
The NFDC had in 1992 also launched a trust in the name of Cine Artistes Welfare Fund of India with a corpus of Rs 48.9 million, which presently stands at Rs 63.6 million. Just under 1000 cine artistes have availed pension and other benefits and around 450 are doing so at present.
The NFDC showed a huge loss of Rs 92.549 million in 2003-04, which came down to Rs 38.674 million a year later. The Corporation showed profit of Rs 24.815 million in 2005-06 but again ran into a loss of Rs 50.56 million and Rs 22.757 million in 2006-07 and 2007-08 respectively.
