Key highlights

Currently, Renewable account for about 39% of total loan book, with about 80% of the renewable loan book being wind power and remaining solar power.

While the loan sanctioned during the year FY'15, grew by about 60% to Rs 4112 crore on YoY basis, loan disbursement in FY'15 stood at Rs 2493 crore as against Rs 3071 crore for FY'14. Lower disbursement is as a result of slower progress of government policies on renewable front. However, the policies are getting clearer and management expects disbursement growth to pick up strongly in FY'16.

Total cumulative loan book as on Mar'15 stood at around Rs 6379 crore as compared to Rs 5883 crore for Mar'14. About 39% is from renewable, about 32% is from thermal projects, about 9% from hydro projects and rest is contributed by other sectors.

As per the management, there is a firm policy taken by the Board, not to make any further investments in equity in any projects.

Currently, the company has equity investments in 4 projects. Details are as under:

1) RS India Wind Energy Project comprises of 2 parts, Phase 1 being 41 MW is commissioned and operating at healthy PLF. While Phase 2 which is of 58 MW is yet to commission. The management of RS India, misrepresented facts on commissioning of the project. Infact the project was supposed to get commissioned in 2011, but there has been a continuous delay and no intent of the management to start the project. Hence on a prudent accounting policy, management has voluntary made provision of about Rs 61 crore, which is a full provision of the equity investments made by PFS.

2) India Energy Exchange is fully operational and is operating at healthy PLF. PFS holds 5% stake in the company and there are no near term plans to sell off the stake.

3) Ind Barath Energy is a 700 MW project in which PFS has invested about Rs 105 crore. The project is on track and will get commissioned in around 6 month's time from now.

4) East Coast Energy project is a 1320 MW project in which PFS has invested around Rs 133 crore. There is a cost overrun in this project and promoters are not able to bring in their equity portion. So while construction activities are in progress there is a delay and some concrete update will be available by the end of FY'16.

Restructured assets comprises of a total of Rs 400 crore. Rs 200 crore relates to actual Restructured assets and remaining Rs 200 crore comprises of DCCO (date of commencement of commercial operation) projects, wherein RBI have allowed the Thermal power projects which have yet not commissioned till date, a time period of 2 more years before treating them as restructured. Still PFS, on a conservative estimate, has provided about 5% of these Rs 200 crore projects. The remaining Rs 200 crore projects comprises of 3 projects namely:

Konaseema Gas based power project in which PFS has provided for about Rs 116 crore of loans, another Rs 15 crore loan to a wind power project and about Rs 60 crore loans to another project. Konaseema is located in A.P and due to delay in gas; the project is not able to operate. The entire project is well maintained and is ready to operate but for gas. There is a bid for gas supply coming up in July'15 in which the project will also participate and if gas comes, the project will be operational. If not, then entire project will be an NPA. PFS conservatively has already provided around 15%, ie around Rs 20 crore as Provisions for Konsaseema project in FY'15.

Remaining projects, management expects things are on track and will be sorted out very soon and there is very less likelihood of these projects going NPA.

Management for the first time did not give any guidance on loan book growth. While they were optimistic, looking at the current uncertainty and delay in Government decisions etc, they want to be more conservative.

Other income component would gradually increase as the share of processing fees, management fees and structured fees etc would increase as the loan book pie increases.

Overall, management continues to be optimistic going forward with a clear thrust on renewable energy.