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Analyst Meet / AGM
13-Feb-20
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Conference Call
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Power Finance Corporation
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Expects to reduce GNPA ratio 5-5.5% with resolution of Rs 9078 crore accounts in next few months
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Power Finance Corporation conducted a conference call 12 February 2020 to discuss its financial results for the quarter ended December 2019. Rajeev Sharma, Chairman and Managing Director of the company addressed the call:
Highlights:
- The company has exhibited stable performance on most of the financial indicators and expects to maintain stable performance ahead.
- The company has shifted to new lower corporate tax rate of 25.17% from earlier rate of 34.9%, which is expected to have positive impact ahead on significant tax saving. However, this shift has led to impact on account of reversals of DTAs of Rs 319 crore in Q3FY2020.
- The company has improved CRAR back to Pre REC acquisition level to 19.32% from 18.95%, while the company expects further improvement in CRAR in future.
- REC has declared dividend and company expects to reflect profit of Rs 1143 crore in Q4FY2020.
- The company has recorded strong 26% growth in disbursements to Rs 18473 crore in Q3FY2019, while the loan growth improved to 12% end December 2019.
- The company is working hard on resolution of stressed assets, which has helped to reduce GNPA ratio to 8.43% and NNPA down to 3.94% which is lowest in last two years.
- The company has resolved couple of accounts amounting to Rs 2650 crore in the current helping to reduce NPAs. Earlier the company had resolved the account of GMR Chhattisgarh, while in the recent the company has resolved the account of Rattan India Amaravati having exposure of Rs 1720 crore through OTS with additional hit on profits due to sufficient provisions.
- The company expects resolution few more accounts in next few months from 6 accounts amounting to Rs 9078 crore with provisions coverage of 47%, which is expected to reduce GNPA ratio to 5-5.5% in next two quarters.
- Among these 6 accounts, three accounts being resolved under NCLT are Jhabua Power (exposure Rs 764 crore), Jalpower (Rs 386 crore) and Ind Bharat Utkal (Rs 1368 crore). The resolution plan or OTS is approved under NCLT. Three accounts being resolved outside NCLT are RKM Powergen (Rs 5163 crore), Essar Transmission (Rs 438 crore) and India Power Haldia (Rs 959 crore).
- The company is diversifying its borrowing portfolio in the domestic as well international markets. The company has participated in the issuance of Bharat Bond ETF and raised Rs 2500 crore. The company raised Rs US$ 750 million from foreign bond issue at the coupon rate of 3.95%.
- With the share of foreign borrowings at 15%, the company has hedged up to 67% of the exchange risk for the portfolio with residual maturity of up to 5 years.
- The exposure to MB Power is Rs 1000 crore Sasan Rs 1500 crore and is standard exposure. Exposure to Reliance Discoms stands at Rs 2000 crore and payments are on time.
- The resolution of SR Mahan with the exposure of Rs 1300 crore is in process.
- In case of KSK Mahanadi (Rs 3300 crore exposure), the NCLT proceeding have started.
- The exposure to Lanco Amarkantak stands at Rs 2300 crore and Rattan India Nashik at Rs 3000 crore.
- The company has stressed account exposure of Rs 29000 crore, of which 15 accounts with the exposure of Rs 1300 crore are resolved outside NCLT and other 15 accounts are resolved under NCLT.
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