The Government's recent decision to make Delhi-based finance company IFCI (Industrial Finance Corporation of India) a state-owned unit was apparently not welcomed by investors.

Following the announcement of the government's decision to convert optionally convertible debentures (OCDs) held by the government in IFCI into equity to raise the Centre's stake in the company to more than 55 per cent, stock in the public financial institution slipped 16.31 per cent, or Rs 5.70 a share, to Rs 29.25 on the Bombay Stock Exchange (BSE) on Friday.

The sharp fall in the IFCI stock price made the company the second biggest loser on the BSE on Friday.

Atul Rai, chief executive & managing director of the company, said, "IFCI has a million-plus shareholders and the government's intent to convert its debentures into equity at par will have a very adverse impact on these shareholders."

The IFCI stock has huge interest among smaller shareholders, with more than one million investors holding 43 per cent of the company's shares equivalent to equity base of Rs 787 crore.

The Cabinet, on Thursday, gave approval to the proposal to exercise the option to convert OCDs worth Rs. 400 crore and Rs. 523 crore held by the government in IFCI into equity, with immediate effect.

After the conversion of Rs. 923 crore OCDs into equity, the government's holding in the company will jump to 55.57 per cent and, on including the holding of banks' and financial institutions, the government's stake will become 68.31 per cent.