PFS to sell two stressed assets to ARC; focus on road, transmission, ports

With the current stress in powergen sector, PFS has 18% of its Rs 134 bn loan portfolio in distress, not all of which are NPAs

Jyoti Mukul  |  New Delhi 

Financial Services (PFS), the lending arm of Power Trading Corporation, plans to give away two of its accounts to an asset restructuring company.

The company has Rs 10.26 billion loan as third stage accounts corresponding to NPA for which it has made provision of Rs 5 billion. This is 7.68 per cent of loan portfolio as on June 30, 2018 on gross basis and 3.92 per cent on net basis after making about 50 per cent provisioning on expected credit loss basis.

With effect from April 1, 2018 the loan account classification for the company is being made according to Ind-AS requirements. “We have made higher provision than the requirement since our provisioning complies with IND-AS,” Ashok Haldia, managing director and chief executive, PFS, told Business Standard in an interview.

Two NPA account, Sispara wind farm in Maharashtra and Raigarh Champa, a rail track for power plant, aggregating about Rs 900 million loan are in the final stage process of being sold to ARC, said Haldia.

PFS is also a lender in where and ICICI Venture promoted Resurgent Power’s bid has been challenged by Together with SKS Power, where investor bids are under consideration, PFS’s aggregate exposure to the two is more than Rs 6 billion.

Out of the remaining NPAs, six are undergoing insolvency proceedings in the with aggregate loan amount of about Rs five billion. Out of these, PFS is sole lender in one account namely Rajpura Hydro for Rs 600 million. The resolution plan is before NCLT for approval. In addition two loan account with aggregate exposure of about Rs two billion under consortium would be referred to NCLT soon.

About 90 per cent of the company’s total NPA amounting to about Rs 10.26 billion is in thermal and hydro sector. If excluded, the percentage of NPAs for the rest of the loan book is 1.04% and 0.84% on gross and net, respectively. Haldia said the company going forward would focus on lending to road, transmission and port sectors which are currently about 10 per cent of the loan book. “We were earlier only in the power sector but have spread out risks by diversifying. Besides, there were opportunities in these sectors,” he added.

PFS has made provisioning on its portfolio on the basis of expected credit loss based on assessment of probability of default as per new accounting standards as compared to incurred loss under the RBI’s prudential norms earlier,” said Haldia.

According to RBI norms, as on March 31, 2018, gross NPA were Rs 8.38 billion and Net NPA were Rs 5.19 billion (net of provision amounting to Rs 3.19 billion). In percentage terms gross NPA were 6.54 per cent and net NPA were 4.16 per cent of the loan portfolio of Rs 128.16 billion.

The company feels that any further impact if any is expected to show up in the current financial year.

First Published: Thu, September 06 2018. 15:22 IST