PTC upbeat about maintaining 30-40% growth rate

PTC India Financial Services is confident of maintaining its healthy growth rate of 30-40 percent in the coming quarters, on the back of the government's push in renewables sector, its Managing Director and Chief Executive Officer Ashok Haldia said on Thursday. "We are growing in 30-40 percent range. I don't see any reason why we cannot maintain that growth given the government's push on renewables space," Haldia told CNBC-TV18. He added that the company's diversification strategy was showing results. "There has been diversification and its has been on a strong footing in the renewables space."The company's NII beat market estimates in the quarter ended March 31, but its earnings were lower than estimates on account of higher provisions. Its provisions went up 23 percent on YoY basis against a Rs 43 crore in Q4FY16 against 3.5 crore in the previous quarter. PTC's profit before tax (PBT), excluding the sale of investments, for FY16 jumped 32 percent to Rs 325 crore against Rs 245 crore in FY15. "Profits haven't met expectations," Haldia said, adding that the growth has been as the company had expected.Haldia, however, said, "The company's loan book recorded a growth of 36 percent — in terms of renewables and diversification that we were looking at."Haldia said that the company made provisions against its standard and other economic infrastructure-related assets. "Many of our projects have moved into positive direction," he said. Haldia said about 70 percent of the loans sanctioned by the company went to renewables and 10-15 percent to new areas like roads and ports. He said PTC sanctioned loans worth Rs 2,100 crore in FY16 against Rs 600 crore the year ago. PTC's disbursement in Q4 stood at Rs 1,500 crore against Rs 800 crore in the year ago period. Below is the verbatim transcript of Ashok Haldia's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Reema: Your provisions have gone up by nearly 23 percent on year-on-year basis and if I compare it on quarter-on-quarter (QoQ) basis then it is a huge jump. Provisions at Rs 43 crore compared with only Rs 3.5 crore on QoQ basis. Could you tell us a reason why the provisions have gone up so much and the outlook on that going ahead?A: The first thing is that the profits that you have been saying have not met the expectations. If you look into the profit before tax, for the year has been Rs 325 crore compared to Rs 245 crore, a jump of 32 percent and this is excluding the profit on the sale of investment that we made. If we include that then our profit before tax would be Rs 531 crore compared to the last year\\'s profit of Rs 245 crore. However, when they translate into return on assets and return on network, there has been a significant jump. So first thing is that the profits have been upwards and they have been upward significantly and if you look in terms of total income and the interest income, there has been a jump of about 25-30 percent in all these ratios, this is one. Second, in terms of growth the loan book has recorded growth of more than 36 percent and it is both in terms of renewable and also in terms of diversifications that we were looking in terms of related economic infrastructure transmission for that matter or the ports and annuity based roads and they all taken together now accounts for about 10 percent of our sanctions. So that's how we thought about our strategic initiatives and a move in that direction. Therefore, coming to the point you were talking about of the provisioning that we have made; we have been dealing with assets that we have been talking about, where we have made provisions against the stranded assets and also the other assets and we are engaged with the promoters and the projects and we are trying to find the solution and many of the projects have moved into a positive direction, for example some of the projects where the commercial operation date (COD) was expected to go beyond two years and we had made the provisioning. Now they have achieved the financial closure for the overrun. One of them have achieved the commercial operations but in the context of the uncertainty that we see around in the sector and the project related issue, we do not know as we engage and as the time pass by. Reema: Do you expect provision to come down next quarter since some of your projects are seeing positive traction?

A: I would only say that we are constantly engage with them and some of them are going into positive direction but to respond to your question specifically because Reserve Bank of India (RBI) as per its norms would requires that once you have created a provision even if the assets become positive and they start generating and pay you back, you have to continue to hold provision for some time. So that is what the reality is. So we have been prudent, we have been pragmatic and seeing the uncertainty around but the growth to me has been significant and as we expected it to be.

Nigel: What were your disbursements for the past quarter? Could you tell us how much went to wind, how much went to solar and also from these disbursements how much were made to new projects and how much were made to existing projects?

A: The disbursements that we have made in the last quarter that is Q4 has been about Rs 1,500 crore compared to Rs 800 crore odd in the corresponding quarter of the previous years. The loan we sanctioned was Rs 2,100 crore compared to Rs 600 crore on the corresponding quarter. However, majority of these loans have gone, if I can say on the year as a whole, about more than 70 percent of the loans have gone to the renewable and significantly as a part of our strategy, about 10-15 percent of these loans have gone to the new areas that we are looking around into roads, ports and that kind of stuff. So there has been diversification, there has been a strong foot forward in the renewable.

Reema: Will the diversification aid your margins or lower it because your margins on QoQ basis have come down. Could you guide us more on the margins?