Tourism Finance Corporation of India (TFCI) total income in the fourth quarter dropped 18.3 percent to Rs 36.5 crore against Rs 44.7 crore in the year-ago period.In an interview to CNBC-TV18, Satpal Arora, MD of the company, said 50 percent of TFCI's non-performing assets (NPAs) will reverse in the first quarter this fiscal to 5 percent. The company's gross NPA stands at 10 percent and net NPA at 8 percent. The company's net interest margin for the March quarter has come down to 2.7 percent against 3.8 percent a year ago, he added.TFCI has a pipeline of Rs 350 crore and sanctioned amount of about Rs 325 crore, he said. "This year we are targeting disbursement of Rs 600 crore and sanction of about Rs 800 crore," Arora added. Below is the verbatim transcript of Satpal Arora's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: These are very weak numbers, whether I look at your total income for the Q4 vis-à-vis the Q3 or the Q4 last year, on both counts it is a fairly big fall that you have reported in numbers, about 20 percent fall. Why that?
A: In the last quarter four of our new accounts became non-performing assets (NPAs) because of delay in payment although we received the payment in April, but as per Reserve Bank of India's guidelines, we have to show it as NPA though interest rate will be recovered. So there is a difference of about Rs 12 crore and 50 percent of that has already been received.
Latha: You will be able to reverse it next quarter - that is in the current quarter?
A: I think 50 percent of the NPA will be reversed within this quarter because we are receiving the money. It's just a technical NPA.
Sonia: What exactly is the gross NPA and the net NPA in this quarter and how much will it go to over the next couple of quarters?
A: Rs 120 crore of loans have become NPA and out of this 50 percent will be recovered within May or June. Therefore, our NPA percent will come down.
Latha: What is the percentage now?
A: At this moment gross NPA is about 10 percent and net is less than 8 percent.
Latha: It will come down to how much?
A: It will be reduced by 50 percent, around 5 percent by June quarter.
Sonia: IFCI holds about 39 percent stake in the company. Are they looking to further divest the stake?
A: I am not aware of that because they have to take the decision.
Sonia: Any talks you had with them?
A: Not yet.
Latha: I want to know about your net interest margins (NIMs) as well. How did they do in FY16 and how is it likely in FY17?
A: Because of reversal of income on NPA accounts, our NIM has come down to 2.7 percent from 3.8 percent, but we will improve it in this quarter because we will be recovering the interest. Our loan is fully secured, so security is not a problem, we will be able to recover it.
Sonia: What exactly is the disbursement that you have seen this time and what has the growth been compared to the last few quarters?
A: This year our growth is less rather it's negative. We have been cautious in lending. We have stopped lending to real estate and loan against shares. We are interested in primary security. Therefore, disbursement is less and promoters are also cautious.
Sonia: Can you give us an exact amount of disbursements and compared to what it was last quarter?
A: This year we have disbursed about Rs 380 crore as against Rs 508 crore last year.
Latha: What do you expect the loan growth to be in FY17?
A: We have a pipeline of new cases of Rs 350 crore and sanctioned amount of about Rs 325 crore. This year we are targeting disbursement of Rs 600 crore and sanction of about Rs 800 crore.
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