Financial institution IFCI today posted 25 per cent decline in net profit at Rs 114.05 crore for the third quarter ended December 31 due to a rise in cost of fund.

The company had profit after tax of Rs 152.92 crore in the same period last fiscal.

The profit has declined because of increase in cost of funds and decline in investment demand, IFCI CEO and Managing Director Atul Rai said.

However, its total income rose to Rs 673 crore compared to Rs 635.8 crore in the same quarter a year ago, registering 5 per cent growth.

Income from operations for the 9 months ended December 2011 increased by 15.8 per cent at Rs 2,019 crore against Rs 1,743 crore in the same period previous fiscal, he said.

However, the company's net profit has declined to Rs 444.37 crore, as against Rs 473.22 crore in the same nine-month period last fiscal.

Net Interest Margin of the company stood at 2.3 per cent while the capital adequacy ratio was 20.15 at the end of December, 2011.

Asked about capital raising plan, Rai said, the company is constrained by its complex capital structure to raise funds. The complexity is due to legacy issue.

The complexity is due to government of India holding optionally convertible debentures (OCDs) worth Rs 523 crore. Also, the government has issued OCDs worth Rs 400 crore maturing in 2021.

At present, the government does not have any direct stake in IFCI. State-owned insurance firms and financial institutions, such as LIC, IDBI Bank and Punjab National Bank, own around 28.5 in the entity.