PFS to sell two stressed power assets to ARC
PTC India Financial Services (PFS), the lending arm of Power Trading Corporation, plans to give away two of its accounts to an asset restructuring company (ARC). The company has ~10.26 billion loan as third stage accounts corresponding to NPA for which it has made a provision of ~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.
From April 1, the loan account classification for the firm is being made according to Ind-AS requirements. “We have made higher provision than the Reserve Bank of India requirement since our provisioning complies with IND-AS,” Ashok Haldia, managing director and chief executive, PFS, said.
Two NPA accounts —Sispara wind farm in Maharashtra and Raigarh Champa, a rail track for power plant — aggregating about ~900-million loan are in the final stages of being sold to ARC, said Haldia.
PFS is also a lender in Prayagraj Power where Tata Power- and ICICI Venture-promoted Resurgent Power’s bid has been challenged by JSW Energy. Together with SKS Power, where investor bids are under consideration, PFS’ aggregate exposure to the two firms is more than ~600 billion.
Out of the remaining NPAs, six are undergoing insolvency proceedings in the National Company Law Tribunal, with an aggregate loan amount of about ~5 billion. Of these, PFS is the sole lender in one account, namely Rajpura Hydro, for ~6 million. The resolution plan is before the National Company Law Tribunal (NCLT) for approval. In addition, two loan accounts with exposure of about ~2 billion under consortium would be referred to NCLT soon.
About 90 per cent of the firm’s total NPA, amounting to about ~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 per cent and 0.84 per cent on gross and net, respectively. Haldia said the firm would focus on lending to road, transmission and port sectors, which are 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 said.
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 stood at ~8.38 billion and net NPA were ~5.19 billion (net of provision amounting to ~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 ~128.16 billion.