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Analyst Meet / AGM
30-May-19
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Analyst Meet
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Power Finance Corporation
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Expects to maintain stable loan growth and margins in FY2020
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Power Finance Corporation conducted an analyst meet on 29 May 2019 to discuss its financial results for the quarter ended March 2019. Rajeev Sharma, Chairman and Managing Director of the company addressed the call:
Highlights:
- As per the company, the financial year FY2019 was a year of change in business and regulatory landscape
- First, the company has successfully completed the acquisition of REC. With the acquisition of REC, the consolidated loan book stands at Rs 595877 crore, net profit at Rs 12640 crore, net worth at Rs 63484 crore and CRAR are at 16.78% end March 2019.
- After the merger, the company has become the largest lender to the power sector, second highest profit making NBFC after HDFC and third largest profit making PSU after IOCL and ONGC. With the acquisition of REC, the company is poised for future growth.
- Second, the company has successfully switched to IND AS accounting standard in FY2019.
- The year was a challenging for NBFCs on liquidity front, while the company has strongly focused on diversifying sources of borrowing.
- The company has maintained strong loan growth and continued to diversify loan book.
- The strong performance of the company in the quarter ended March 2019 was driven by strong loan growth of 13% and the decline in cost of funds by 30 basis points. The company expects to maintained loan growth above 13% and stable spreads in FY2020.
- The loan book of the company stood at Rs 3.15 lakh crore of which 83% related to the government sector with nil NPAs, while 17% related to the private sector of which 9% is classified as NPA and efforts are on for resolution and recoveries of these advances.
- During the quarter, the company has upgraded the exposure of Rs 800 crore to GVK Ratle and reversed provisions of Rs 650 crore after successful payment performance for last one year.
- The company has witnessed slippages of one account of Haldia Power Project in Q4FY2019.
- The company has exposure of Rs 8000 crore to 3 accounts where NCLT has been withdrawn after SC order on RBI 12 Feb circular. In case of Rattan India Amravati project, the company has received renewed OTS proposal and the company is holding provisions of 50%. In case of Rattan India Nashik, the approval is received for operationalizing 507 MW project. In case of KSK Mahanadi, its proposed to take the project back to the NCLT.
- The company has exposure of Rs 1400 crore to Dans Energy, Shiga Energy (hydro power projects in Sikkim) and Essar Transmission with the provision of 11%, where the company is expecting 100% principal recovery.
- The company has exposure of Rs 800 crore to GMR Chhattisgarh project with the provisions of 51% and the company expects hair cut of 50%. The account is expected to get resolved in months time.
- The company expects strong power demand to continue with rise in population and support from various government schemes. The power generation target of 175 gigawatt by 2022 provides strong growth opportunity for the company.
- The company does not expect any significant stress addition, going forward.
- The company would diversify it loan book and proposes to focus on renewable energy electrical components of lift irrigation projects, sewage treatment plants, smart cities, mini & micro grid, go-gen plants, electrical vehicle charging infrastructure etc.
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