Sanctioned loans for Rs 6,500 crore in Q4: PTC India

For the fourth quarter of FY16, PTC India Financial Services has sanctioned loans worth Rs 6,500 crore compared to Rs 4,100 crore in year-ago period, says Ashok Haldia, MD & CEO, PTC Financial Services. Only recently, the company was in news for sanctioning loans worth Rs 1,100 crore for four projects in the renewable space and for two projects in power transmission. The financial services firm has not added any non-performing assets in the December quarter and the stressed assets in the NPA remain constant since Q3, says Haldia.Below is the transcript of Ashok Haldia’s interview with Reema Tendulkar and Latha Venkatesh on CNBC-TV18. Reema: Very recently, you sanctioned about Rs 1,100 crore for four projects in renewable and two projects in transmission of power. How have the sanctions in disbursements been in Q4? Has there been a pickup compared to the prior years and what should we expect in FY17? A: I would, since March results are yet to be out, but during the quarter and for the year 2015-2016, we have sanctioned total loan worth Rs 6,500 crore compared to Rs 4,100 crore in the last year. And this includes Rs 1,100 crore that you are talking about in the board meeting that we had in the month of March. So, our sanctions till the middle of March and the figures that are the in the public domain is that Rs 6,500 crore worth of sanctions. So, this indicates growth of something around 50 percent. Latha: What is the level of your loan defaults, if any – your bad loans? A: As I stated at the time of the last quarter’s performance interaction, there had been no non-performing assets (NPA) added in the December quarter. And our stressed assets and the NPA at that point of time remained the constant as was in the earlier quarter. So, there were no new additions made. Latha: Is that because your loans are all very young at this point in time? Your projects have not yet reached commercial operation? A: No, that is not the case because most of the projects, particularly in the renewable space, they are in the commercial production. So, about 40 percent of our projects are in commercial operations. And some of the cases that we have been talking about, which are stranded that is the stressed assets, for the reason of the RBI guidelines, that in case commercial operation date (COD) extends beyond a certain period, you need to make necessary provisioning. Latha: Have you had such cases? A: Yes, obviously. As we had explained earlier, there were cases where the COD was extended beyond two years or three years and as per the RBI guidelines, we had to make provisions. These are the stranded assets and the project might have been delayed because of various macro-economic reasons and the project might still be viable. So, there is no adverse remarks on the viability of the project, but because the COD has been extended and what the RBI guidelines required us to make the provisions. Latha: What is that proportion of assets where you had to make provision in spite of it being standard because of the delay in commissioning? A: I am not sure about the exact number but may be around three to four or may be five. Exact numbers I am not sure but certainly between three and five. Reema: Your net interest margins (NIM) went up in the December quarter to over 6 percent. Now that we are entering in to a declining interest rate environment for FY17 what would be the net interest margins you have comfort on or you would be comfortable with? A: Certainly any infrastructure finance companies would like to maintain its net interest margin and the spread but given that it all depends on the market and the competitive forces. The challenge before us is that while we reduce the rate we also constantly attempted the reduction in our cost of borrowing. In the last quarter precisely that had taken place while our yield had come down our cost of borrowing had also come down. What we are seeing the new regime with the Reserve Bank of India (RBI) stances if the transmission by the public sector or the private sector banks takes place than our cost of borrowing also comes down then certainly it would affect both the yield as well as the cost of borrowing. Our constant endeavour is to maintain the spread and the NIM and at the sometime depending upon the market conditions and improve our ability to tap good project and the good promoter. We do not shy away from leveraging our NIM and the spread. Latha: What is your spreads in FY16 and what do you see it in FY17? A: We had details up to December 15 and we had a spread of around 4 and the NIM of around 6. Latha: You see it around the same level in FY17 or will it be lower? A: That would depend because the interest rates are coming down and also our constant efforts on reducing our cost of borrowing. As I said if required we would leverage the NIM and margin for the high quality growth in our loan book. Latha: One final question. Because of the Ujjwal Discom Assurance Yojna (UDAY) scheme or for whatever reasons, are you seeing an improvement in the number of power projects? Any increase at all? A: What I would say is that there has been improved level of confidence of developers. And also, in some of the states, there has been better recovery of dues including for the renewable projects. The UDAY scheme has been announced, is in the process of being implemented and I am sure it would yield good results in terms of the financial structuring of the Discom’s balance sheet as well as improvement in the operational efficiencies and the reduction in the cost. So, it would be too early to say that there has been solitary impact on the projects, but certainly, there are indications that it should lead to good results on the projects.