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By 2004, the Industrial Finance Corporation of India ("IFCI") is on the verge of collapse; its profitability has become negative. Non-performing assets ("NPAs") have reached their peak, and the company does not have enough money to do business. It begins selling off and renting out its premises to get money to sustain its operations, going door-to-door to save itself. Employee morale is at its lowest level. IFCI's operations become unsustainable and are no longer viable. Against this backdrop, the IFCI board of directors and the government of India are in a quandary as they try to decide on IFCI's future course. After evaluating all possible options, IFCI and the government decide to restructure IFCI. IFCI's turnaround, which catapults it on the path to growth includes multiple factors such as converting debt into equity, creating provisions for bad loans, restructuring liabilities, retiring high-cost debt, managing NPAs aggressively, voluntarily retiring staff, focusing on short-term projects, adopting a selective approach in identifying projects for assistance and monitoring projects more effectively. The most critical factor that enables the turnaround of the state financial institution is the able leadership that not only changes IFCI's public sector culture but also brings a new work culture and ethics to the organization. ICFI's turnaround from the financial crisis inspires a lasting motivation in the hearts of its employees.

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After independence in 1947, the government of India founded the Industrial Finance Corporation of India as the first development financial institution to provide medium- and long-term loans to public limited companies and cooperative societies engaged in productive activities. Then in 1991, the government’s New Economic Policy opened the door to liberalization, privatization and globalization of the Indian economy. The company was restructured and incorporated in 1993 but was unable to diversify its business model from project financing to other financial services. By 2004, it had almost collapsed; its profitability had become negative. Non-performing assets had reached their peak, and the company did not have money to do business. It began selling off and/or renting out its premises, going door-to-door to save its future, and employee morale hit rock bottom. The business had become unsustainable and unviable. With this as backdrop, the board of directors needs to decide on the company’s future. What is their best option: liquidation, restructuring, merger or strategic partnership?

After independence in 1947, the government of India founded the Industrial Finance Corporation of India as the first development financial institution to provide medium- and long-term loans to public limited companies and cooperative societies engaged in productive activities. Then in 1991, the government's New Economic Policy opened the door to liberalization, privatization and globalization of the Indian economy. The company was restructured and incorporated in 1993 but was unable to diversify its business model from project financing to other financial services. By 2004, it had almost collapsed; its profitability had become negative. Non-performing assets had reached their peak, and the company did not have money to do business. It began selling off and/or renting out its premises, going door-to-door to save its future, and employee morale hit rock bottom. The business had become unsustainable and unviable. With this as backdrop, the board of directors needs to decide on the company's future. What is their best option: liquidation, restructuring, merger or strategic partnership?