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Analyst Meet / AGM - Analyst Meet

Restructured assets stands around Rs 7000 crore

Power Finance Corporation

01-Jun-2013, 12:44
Power Finance Corporation (PFC) held its Analyst Meet on 31^st May'13 and was addressed by Mr. Satnam Singh CMD

Key highlights

PFC reported strong earnings with PAT for Q4 FY'13 up by 58% and NII, up by 40%. For FY'13 as a whole, PAT was up by 46% and NII up by 43%.

For FY'13, sanctions (excl. R-APDRP) grew by 26% to Rs 75147 crore and disbursements (excl. R-APDRP), grew by 13% to Rs 45151 crore. Loan assets increased by 23% to Rs 160367 crore.

The company did a 0.08% provision coverage on standard assets for FY'13, which it did not provide in FY'12. The amount for FY'13 stood at Rs 133 crore.

Management continues to remain optimistic about power sector, despite challenges. According to them, some of the positives that is happening are: - increase in tariff by SEB's in FY'13 which was in range of 0-27%, 15 states signing Financial restructuring package (FRP) and of which 10 states have gone ahead with in principle approval and last date for FRP extended till 31^st July'13, implementation of R APDRP for distribution across India, resulted in savings in distribution sector of loss of power in range of 0-10% and finally, expectation of interest rates to reduce in FY'14.

As far as coal is concerned, for FY'13, Coal India supply of coal to power companies is up by 10% y.o.y despite all the hue and cry. Management is very optimistic about availability of coal for power project. According to them, the availability is not an issue, it's just that the production is not able to keep the pace with the increase in generation capacity and the mismatch will soon be resolved. Management expects things to settle down in less than 1 year's time.

Restructured assets as on Mar'13 stood around Rs 7000 crore, which includes about Rs 1100 crore of Sasun project. Management however, indicated that these restructured assets are the assets, which are facing delay in commissioning the asset, because of whatever reasons, but it does not mean the inability of the project to pay back.

Loans outstanding to Suzlon stands around Rs 1000 crore, as per the management, these loans are for purchase of capital equipments and are not of working capital in nature and hence the company is not a part of CDR package, as other lenders have filed for. Also uptil 30^th Sep'12, interests were being paid and hence are not an NPA so far.

Management also has indicated that they have submitted their request to the ministry of power, for their interest in increasing stake in PSU bank. This is predominately to have better management control on multiple escrow account that it opens, with each of its borrower.

Also the company has finalized its partner Tata Capital for venturing into Power Private equity fund and is waiting for clearance from Ministry of power.

CAR of PFC as on Mar'13 stood at 17.98% of which Tier 1 capital is at 16.83%. RBI has asked the company that for future disbursements it need to comply with the standards of banks which require keeping minimum 50% of capital aside, however, management is in talks with ministry as well as RBI that it would result in another Rs 10000 crore requirement for the company and will increase the cost of project for power companies and it is not feasible at all.

For FY'14, PFC has targeted sanctions (excl. R-APDRP) to be Rs 59000 crore, disbursements (excl. R-APDRP) to be Rs 47000 crore and resource mobilization of Rs 44000 crore.

Book Value of PFC as on Mar'13 stands at Rs 169.Gross NPA stands at 0.71% and Net NPA at 0.63%.