Capitaline

Analyst Meet / AGM 12-Aug-17

Conference Call

PTC India Financial Services

Expects to sustain loan growth with strong pipeline of sanctions

PTC India Financial Services (PFS) conducted a conference call on 11 August 2017 to discuss the financial results of the company for the quarter ended June 2017. Ashok Haldia, MD&CEO addressed the call:
Highlights:

The loan assets and non-fund based commitment against sanctioned loans increased at healthy pace of 32% to Rs 12,553 crore end June 2017 from Rs 9536 crore end June 2016. The margins continue to remain under pressure, while the company continues to focus on bringing own its overall cost of funds. The company expects to sustain loan growth with strong pipeline of loan sanctions. The company has been cautious and selective in taking new exposures, as it considers the asset quality as an important factor.
As per the company, the concerns have been raised about the declining tariff in renewable power sector. The renewable power sector has 60% share in loan book of the company. As per the company, the major concern of solar power sector relates to the states not signing power purchase agreements (PPAs), not honoring of PPAs and backing down on tariff rates.
The company has been cautious and responding swiftly to the changes in this sector in terms of required changes in loan appraisal policy. The company has been sanctioning loans to the only renewable power project, where PPA has been signed. The company has been diversifying to the other sectors on a gradual base is such as road ports etc.
None of the solar and wind renewable power project of the company is facing any stress. In case of wind power project in Tamil Nadu the project has started generating revenues, while the dues are expected to be paid and account become standard by end FY2018. In case of second project in state of Maharashtra, where the PPA was not signed earlier has been signed currently. The first bill of power supply to the Maharashtra State Electricity Board is likely to be received any time soon. Thus, the dues are expected to be cleared in next 12 to 18 months.
The company has witnessed fresh slippages of one account from mining developer and operator with exposure of Rs 54 crore in the quarter ended June 2017. The developer was operating the mine of State Government and supplying coal to the state government project. The account has turned NPA as mine was taken away by the government. The compensation has been settled and is likely to be cleared in next 12 months.
Certain NPA accounts of the company are under various stages of resolution. In case of one NPA account, which is a consortium account has been transferred to Asset Reconstruction Company. In case of another NPA account, the promoter has succeeded in signing up PPA with private sector Distribution Company, while the promoter has also approached other financial institution for refinancing of the loan so the account is expected to get repaid. The action under Sarfaesi Act is under process for NPA account. The company is sole lender to project, where the resolution is under IBC is under process. In case of one small NPA account, where the SBI is lead banker the negotiation are going on for change of the promoter.
In case of hydro sector NPA project, the resolution under SDR scheme is under process. The company expects emergence of investor interest for the project after approval of new hydro power policy of the Government of India.
The company expects to achieve resolution for NPA amounting to atleast Rs 300 crore in FY2018.
The company has posted healthy 23% growth in the net interest income to Rs 123 crore in the quarter ended June 2017, driven by decline in the cost of funds. However, the company has been witnessing pressure on the spreads and margins. The loan yields of the company have been impacted due to declining interest rate scenario and reduction in the lending rate of the company.
The loans sanctions and disbursements are usually lower in the first quarter of the financial year, while the company expects loan sanctions and disbursements to pick-up in rest of the year.
The standard restructure advanced book of the company has remained nearly flat in Q1FY2018 at Rs 840 crore end June 2017.
On the loan book front, the company expects to maintain the share of renewable power projects at steady level in FY2018, while the share of non-power sector is expected to rise gradually going forward.
The company has exhibited decline in outstanding sanctions in the quarter ended June 2017, mainly on account of review of existing sanctions and foreclosure of Rs 500 crore of sanctions.

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