No immediate MTM loss worry: PFC

Power Fianance Corporation has announced its Q1 FY09 results. Its net profit was at Rs 296.2 crore versus Rs 308.6 crore. The total income was at Rs 1441.6 crore versus Rs 1145.8 crore.

VK Garg, CMD, Power Finance Corporation, said loans grew 18% in Q1FY09. Unbooked forex losses are at Rs 40 crore versus gain of Rs 28 crore QoQ.

Excerpts from CNBC-TV18's exclusive interview with VK Garg: 

Q: Why are your net profits down marginally from the comparable quarter?

A: The profit is not down marginally, it has rather improved from Rs 281 crore to Rs 342 crore, the pressure that you are looking at is on account of the notional amount of the exchange rate variation. Since we do not have any major repayment during the current calendar year and all other borrowings are long term borrowings, this is not going to affect us in any real matter.

Q: So this is just a mark-to-market that you have done?

A: This is not MTM, but this is just a notional variation that we have provided. Basically if we had a repayment then we would have had a loss, but because we do not have any repayment during the next two quarters rather up to December, there is no immediate reason for a worry or a loss and it is only a notional amount. Since all borrowings are long term borrowings, the actual impact on profits will come as and when the repayments are done and the exchange rate variation losses incur.

Q: Perhaps you could share with us the details of the loan growth that you have seen in this quarter and if there has been any kind of pressure or variation on your margins?

A: The loan growth has been very good, we had sanctioned this quarter new proposals for Rs 15,300 crore as compared to Rs 13,000 crore of the previous quarter, this shows an increase of 18%. The disbursements have increased from Rs 3216 crore the last corresponding quarter to Rs 4733 crore which is 47% higher and all parameters, the comparable PAT has increased by 22%. The exchange rate variation gains in the corresponding quarter of Rs 28 crore and Rs 40 crore, which is the negative variation this year; if you just delete delete that then you can see that the profit after tax has increaseed from Rs 281 crore to Rs 342 crore, which is roughly 22%.