16 Sep : The Union Cabinet today accorded approval to the revival plan of the National Film Development Corporation Ltd. (NFDC). Under this, an additional equity of Rs. 3.00 crore will be infused and the outstanding Government loan of Rs. 19.77 crore along with accumulated interest of Rs. 8.63 crore on it will be converted into equity.
The fresh infusion of equity of Rs. 3.00 crore along with internal accruals/recovery of outstanding dues of Rs. 2.95 crore 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 their balance sheet and start afresh.
The net worth of the Corporation shall turn positive and the paid up and authorized capital of NFDC will increase to Rs. 45.40 crore and Rs. 45.39 crore respectively. The NFDC expects to commence making profits from 2010-11 onwards. A higher level of equity in the Corporation will enable it to fulfil its mandate of promoting the growth of Indian Cinema.
The National Film Development Corporation Ltd. (NFDC) was incorporated as a public sector undertaking in 1975 with the objective to plan, promote and organize 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 more than 300 films in eighteen Indian languages. The role played by NFDC in promoting new talent within the film industry has been significant in the growth of the Indian cinema since inception.
NFDC, once a profit making PSU 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 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.19.77 crore provided by the Government. However, since the performance of the Corporation did not improve, a revival plan was prepared with the assistance of the 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.