Highlights:

The year FY2021 had been a stupendous year and best year for profits and revenues. The sanctions were record at more than 1.5 lakh crore which is a 40% rise over FY2020. Similarly disbursements at almost Rs 93000 crore increased 23%.

Interest income is up 17% and total expenditure has increased only by 8%, finance cost only by 13%.

Loan book has expanded by 17% to Rs 3.77 lakh crore end March 2021.

Networth has increased by 24% and now stands at Rs 43426 crore compared to Rs 35000 crore last year.

The CRAR ratio is now comfortable at 19.72% up from 16.06% last year.

Debt equity has also improved to 7.4 as against 7.94 last year.

The spread has increased, even as yield on loan portfolio has marginally decreased by 11 bps primarily because of liquidity infusion scheme in which the company has given concessional rate of interest considering the pandemic.

Cost of funds has declined by 18 bps to 7.13% from 7.31% helping spreads to improve from 3.26% to 3.33%. Similarly NIM has improved 15 bps from 3.74% to 3.89%.

The return on networth is more than 21% and interest coverage ratio is also comfortable at 1.5 times.

The company has improved asset quality with more provisioning and resolution of few assets.

The gross NPA now stands at 4.84% as against 6.59% end March 2020. The provisional coverage ratio is 64.59% and the net NPA has declined to 1.71% as against 3.32%.

The company is quite hopeful even about the next year seen from the fact that the electricity sector has been quite resilient despite the economy shrinking by more than 7% and the consumption for electricity went down only by about 1%.

In the budget speech last year, the Finance Minister has announced a new revamped distribution scheme of more than Rs 3.05 lakh crore in which almost Rs 1 lakh crore is going to come as a grant so that is going to give a fillip to the distribution sector and with the improvement in the distribution sector should have a cascading effect on all the other segments including transmission and generation sectors and provide financing opportunities for the investment required for these schemes.

Another push is coming from the ambitious target of Government of India for 175 gigawatt power capacity by next year FY2022 and then moving forward to 450 gigawatt of renewable energy.

There is tremendous opportunity to take advantage of this push for renewable energy. Already the company is sanctioning a major part of the investments required in the renewable energy sector.

With the COVID last year, the disbursements in renewable sector had slowed down but hopefully the company should again be on the growth trajectory.

Then there are other areas like e-vehicles, energy efficiency is another area, which the government of India is going to give a push and then the company is entering into associated sectors.

The company is in touch with various agencies, various state governments and their organizations for projects related to lift irrigation, and others and especially the hydro mechanical components and associated civil works in these projects and that is a new business segment which is opening up for the company.

The company is hopeful to maintain or exceed the profit levels in FY2022.

The company has rationalized interest rates from April 2021 with the decline in cost of funds. The company hopes lower rates to help in improving turnover and disbursements without much impacting margins.

The company has an ECL method of providing for on assets and the company has raised standard asset provision at par with the IRAC norm of the RBI which is 0.4%.

On stage three assets also the company has significantly improved provisioning.

Under Atmanirbhar scheme, the company disbursed around Rs 40000 crore in FY2021.

Despite higher profits, the company has not raised dividend with the focus on raising CRAR ratio and reducing debt equity ratio. The company is also expecting certain investment opportunities especially for the DFI, the financial institution for the infrastructure which has been announced in the budget. Looking at overall growth opportunities also the company has maintained dividend levels.

The company has increased provisioning on stage three assets. Last year the company had made a provisioning of around Rs 600 crore on stage three assets which the company has taken this time to close to Rs 1800 crore. The company is very hopeful that some of the provisions will get reversed.

The impact of interest on interest refund was Rs 130 crore.

In FY2021, the company had two upgrades Essar Power and TRN Energy totaling to Rs 2500 crore and one resolution of Facor Power of Rs 500 crore.

There has only been one slippage during FY2021 that is a small renewable project of Rs 36 crore.

Going forward, there are some of the projects which are under very advanced stage of resolutions and the company hope about Rs 3000 crore of assets will be resolved next year.

The company does not foresee any major slippage for FY2022.

In case of R.K.M Power restructuring plan has been implemented on 29 December 2020 and 60.7% is sustainable debt. Rest has been converted into debt instruments and account has been upgraded to standard category. Ind Bharat Utkal resolution plan has been approved by COC and NCLT approval is waited. Ind Bharat exposure is Rs 416 crore and the company is expecting 31% recovery.

Hiranmaye exposure is Rs 1347 crore and the company is expecting a recovery on the restricted plan of around 68%.

The projects which are under NCLT where bids have been received there are five projects where the company has received bids, accounting for close to 6000 crore of exposure and the decision on the bid is an advanced stages. At least a couple of them should be resolved in the first half and the balance could take place in the second half.

All these projects are actually commissioned assets so the company is expecting a recovery which could be varying from 45% to 60 or slightly above, depends on the project.

Among these projects, the resolution for Jaguar, Lanco-Amarkantak and Essar Power is expected soon and the company is getting good recoveries and there may be some provision reversals.

The bidding is going on for Southeast UP Transmission Company and the company expects it should be resolved by this year. DANS Energy should get resolved outside IBC. Restructuring plan is already in very advanced stage.

The company expects normal 10% growth for loan book and disbursements.

The company is looking at participating in the bad bank. However, there is no candidate from its lending portfolio which the company may transfer to the bad bank as of now.

The company aims to have ROE in the range of 15-18%.