Capitaline

Analyst Meet / AGM 10-Nov-15

Conference Call

PTC India Financial Services

Two restructured accounts slipped to NPA category

PTC India Financial Services (PFS) conducted a conference call on 10 November 2015 to discuss the financial results of the company for the quarter ended September 2015. Deepak Amitabh, Chairman, Ashok Haldia, MD&CEO, Pawan Singh, Director Finance & CFO addressed the call:
Key highlights:

The strong surge in topline as well as bottomline of the company was driven by income of sale of equity investment in Ind-Barath Energy (Utkal) at a profit of Rs 206.93 crore.

The company continues to focus on asset quality and stick to regulatory compliance. The company has been following conservative NPA recognition and provisioning policy.

Asset quality of the company worsened with the surge in Gross NPAs to Rs 294 crore at end September 2015 from Rs 82 crore at end June 2015. Two restructured accounts slipped to NPA category in Q2FY2016 - Konaseema Power with the exposure of Rs 116 crore and Suarana Power at Rs 100 crore

Konaseema Power has secured gas supplies and it is expected to commence partial operation from 01 December 2015. The project is expected to operate at the plant load factor (PLF) of 35%, which may help to partially service its debt. However, the project can fully service debt, if the PLF rises to 65%.

In case of Surana Power, the cost overrun necessitated the additional equity infusion into the project. The promoter is facing problems in raising equity for the project, so the lenders have classified the account as NPA. The lead bank lender is also looking at change of the promoter.

Restructured advance book of the company stood at Rs 400 crore at end September 2015, which consists of 5 accounts. Of the restructured accounts, two accounts have exposure of Rs 250 crore – RKM Power (Rs 120 crore) and NSL Nagapattinam (Rs 120 crore). RKM Power has already operationalized its first phase, while second phase is expected to become operational in June 2016.

Loan sanctions jumped Rs 2850 crore in H1FY2016 from Rs 1209 crore in H1FY2015. Disbursement also surged 20% to Rs 1200 crore in H1FY2016 from Rs 997 crore in H1FY2015.

The loan book of the company increased 30% to Rs 7225 crore at end September 2015 over Rs 5551 crore at end September 2014. The loan book consists of renewable projects (42%), thermal projects (31%), hydro (8%) and others (20%).

The company expects to sustain strong loan growth profile. With the better prospects, the company expects loan growth of 50% for the renewable energy sector. The company has active sanctions pipeline of Rs 5500 crore, which is coming up for disbursements over next few quarters, which is mostly in the renewable energy segment.

The company has witnessed sharp decline in yield on asset to 12.62%, NIM to 5.58% and spreads to 3.57% in Q2FY2016 from 13.88%, 6.47% and 4.58% in Q1FY2016. The interest income reversals of Rs 15-16 crore have impacted the margins in Q2FY2016.

However, the cost of funds declined to 9.05% in Q2FY2016 from 9.3% in Q1FY2016. The company has further reduced cost of funds in Q3FY2016.

The average loan ticket size of the company stands at Rs 100 crore.

The loan portfolio of the company consists of 50 renewable energy projects, which are good quality projects. The thermal projects loan book consists of 20-23 projects.
CAR has improved to 25.16% at end September 2015 from 23.34% at end June 2015.
Total cumulative debt sanctioned surged 20% to Rs 12666 crore at end September 2015 over September 2014.

Overview of the power sector

As per the company, enough activity is taking place at the government level, taking care of the need of the power sector in general and renewable power sector in particular.

The Ministry of New and Renewable Energy is working on Renewable Energy Act 2015, which would be major positive for the sector.

The newly announced debt restructuring plan for DISCOMs named UDAY (Ujjwal Discom Assurance Yojana) is also a big positive for the sector.

Coal India is ramping up production, leading to improvement in the stock levels. The railway is also planning to enhance the fuel supply connectivity links between coal mines and power projects.

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