Capitaline

Analyst Meet / AGM 16-Feb-17

Conference Call

PTC India Financial Services

Expects renewable loan share to increase to 60% in next 2-3 quarters

PTC India Financial Services (PFS) conducted a conference call on 15 February 2017 to discuss the financial results of the company for the quarter ended December 2016. Ashok Haldia, MD&CEO, Pawan Singh, Director Finance & CFO addressed the call:
Highlights:

Two important developments happened in the power sector during Q3FY2017. A) CEA report has revised down power demand estimate by 17% to 235 GW by 2021, assuming target of 175 GW of renewable energy generation materializing and focus on energy efficiency. B) Bid for Rewa MP 750 MW solar power project declined below Rs 3 per unit.
In case of UDAY scheme, the achievements of state distribution companies (discoms) are not on expected lines, but satisfactory improvements are visible.
The company's loan book has been growing at 24%, while the company is confident of maintaining healthy loan growth. The share of loans to renewable energy sector has increased to 50%, while the company expects the share of renewable energy in loan book to further increase to 60% in next 2-3 quarters.
The company has stopped fresh lending in the thermal power sector, while expects its share in loan book to decline from current 25% to 10-15% ahead.
As per the company, the share of non-power sanctions (roads, ports and transmission) stands at Rs 2500 crore in overall outstanding sanctions of Rs 20000 crore at end December 2016.
The loans in the other segments are towards coal mining at Rs 203 crore, distribution Rs 1050 crore, energy efficiency Rs 100 crore, manufacturing Rs 73 crore, ports Rs 158 crore, rail corridor Rs 37 crore and transmission Rs 308 crore at end December 2016.
Within the renewal loan book, the exposure to solar power stands at Rs 2220 crore, wind Rs 1942 crore, small hydro Rs 171 crore and biomass at Rs 28 crore at end December 2016.
The disbursement of the company stood at Rs 597 crore in Q3FY2017. As per the company, the disbursements in the solar power segment starts with non-fund commitments as developers intend to reduce cost burden. As per the company, the non-fund commitment extended in Q3FY2017 stands at Rs 550-600 crore, which would later get convert into loans.
The spreads of the company were impacted due to 25 bps reduction in PFS reference rate. However, the company expects substantial reduction in its cost of funds owing to sharp reduction in bank lending rates in Q4FY2017.
About 50% of outstanding borrowings of the company are in terms of long term bank borrowings.
The GNPA ratio of the company rose to 4.78% at end December 2016 from 4.29% at end September 2016. One loan account in the wind power sector in Maharashtra with the exposure of Rs 58 crore slipped to NPA category in Q3FY2017. As per the company, the power purchase agreement of the project is expected to be signed in couple of weeks and then the payment would commence. However, if the payment fails to commence, the company would undertake necessary actions to recover the loans.
The CRAR ratio of the company has improved to 26% after parent's capital infusion. The company would be comfortable with capital position of above 18%, until further capital infusion.
Among the NPA accounts, the company expects resolution in some of the accounts in FY2018.
In case of Surana thermal power project being set up at Raichur in Karnataka, the company has exposure of Rs 96 crore and it has made provision of 20%. The project is witnessing cost-overrun and promoter is failing to infuse more capital. The company has initiated action under SARFAESI.
In case of Konaseema gas based power project, the company has exposure of Rs 116 crore and made provisions of 55%. The projects is facing problem with gas supplies from KG basis, while new developer is under search for the project.
In case of RKM, the company has exposure of Rs 60 crore and 54% provision has been made. The company has exclusive charge over land property. The action under SARFAESI has been initiated and valuation done at Rs 35 crore.
In case of Shalivana, the project is running and payments have started. In case of Kohinoor, the new promoter is being searched. In case of Rajpur, the action under SARFAESI has been initiated.
The company has been following 120 days NPA recognition norms.
Of the power section exposure of Rs 7200 crore, about Rs 4500 crore of exposure is towards operational projects. The operational exposure attracts lower risk weights of 50%.

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