The loan book of the company increased 11% to Rs 3.16 lakh crore end June 2019. Entire government loan book at 82.2% and private sector loan book at 8.2% of overall loan book is regular in servicing & no stress is envisaged. However, the balance 9.6% or Rs 30440 crore of overall loan book to private sector is classified as stage 3 and the company carries provisions of Rs 15700 crore

The provisions coverage for stage 3 stands at 52% end June 2019, which is sufficient to take care of resolution of stressed loans.

The stressed or NPA loan book of Rs 30440 crore consists of 30 projects, of which

- 13 projects with the exposure of Rs 14438 crore are under NCLT with the provisions of 61%. In case of 6 projects with exposure of Rs 3046 crore and provisions of 64%, the application is filed and admitted to NCLT. The application is filed but yet to be admitted in case of 5 projects with the exposure of Rs 9757 crore with 55%. Further the NCLT has passed liquidation order for 2 projects with the exposure of Rs 16535 crore and provisions of 93%.

- 5 projects with the exposure of Rs 12165 crore are covered under RBI 7 June circular and provisions stand at 46%. Among major projects a. Indiabulls Amaravati is commissioned projects with 100% PPA, while ICA is signed and lenders have agreed for OTS proposal of the borrower. Provisions for Indiabulls Amaravati stands at 50%. b. Essar Power is commissioned project and restructuring proposal of the borrower is getting evaluated. The provisions stand at 53%.

- 12 projects are with the exposure of Rs 3837 crore are not covered under circular and carries provisions of 35%. Among major projects, the company has reached resolution for GMR Chhattisgarh loan of Rs 928 crore. The agreement for management change through stake is signed with Adani power. The haircut is expected at 50%, while the company is holding provisions of 51% so no additional provisioning required. In case of balance 11 projects with exposure of Rs 2900 crore, the company is holding provisions of 30%.

The company has diversified funding profile with 87% from domestic sources & 13% from foreign currency sources. The company has comfortable liquidity outlook for FY20 with surplus liquidity in all buckets. The company has sufficient cash flows to cover maturing liabilities.

The company has raised Rs 31700 crore of resources in Q1FY2020, of which Rs 22700 crore were raised through domestic sources such as bonds, CPs and term loans etc at competitive rates. The 54EC bonds book of the bank has trebled in last 12 months which is low cost source of borrowings with coupon of 5.75%.

The company has raised Rs 9000 crore through foreign currency borrowings. The international bond issuance of the company of US$ 1 billion was oversubscribed 5 times, while the company raised another US$ 300 million through syndicated loans.

The foreign borrowings of the company stand at US$ 5.1 billion, of which 49% is hedged for exchange rate risk. Further, 77% exchange rate hedging is done for foreign borrowings with residual maturity of up to eight year, while there is sufficient time for hedging of foreign borrowings with maturity of over 8 years.

The company has witnessed fresh slippage of Suzlon Energy account with the exposure of Rs 900 crore in Q1FY2020. The bank is pursuing the resolution and its holding provisions of 50%.

Overall risk weighted assets ratio stands at 62% end June 2019.

The company expects to maintain steady loan growth in FY2020 compared with 13% growth for FY2019.

On profitability front, the net profit of the company was steady in Q1FY2020 compared with Q1FY2019, despite higher provisions of Rs 220 crore compared with Rs 4 crore in the corresponding quarter last year.

The yields of the company were stable at 10.61%, while the cost of funds has declined to 7.9% over the last year. The marginal cost of funds stands at 7.57%. On sequential basis, the margins of the company were impacted due to borrowings of Rs 14500 crore for acquisition of REC.

The company expects to maintain spreads at 2.6-2.7% for FY2020 compared with 2.67% for FY2019.

The company is well progressing on completion of acquisition process of REC, while the Ministry of Power is closely monitoring and is keen on expediting the process. REC would contribute to earnings of the company through dividend announcement till the merger is completed.