PFC mulls settling stressed projects out of court

Power Finance Corporation (PFC) is looking at out-ofcourt settlements for stressed projects. The state-run company expects to resolve 20-30 per cent of the stressed projects in the next three months, its Chairman and Managing Director Rajeev Sharma said.

Sharma said, “That process of NCLT is almost at a standstill. We are trying to resolve those projects outside of NCLT. In some cases, we are getting one-time settlement scheme (OTS). So, we are trying to sort it out along with other lenders.”

The non-banking financial company (NBFC) has taken most of the companies that were under stressed categories to NCLT. “But now the process is at a standstill due to a Supreme Court directive. After a decision is made in the apex court, the process will start,” he added.

At present, there are around five troubled projects in NCLT which will go into liquidation process. Chinmoy Gangopadhyay, Director (Projects), PFC, said, “The progress in those projects are less than 50 per cent.” There are around 11-12 projects that are promising. We are trying to resolve them outside and get a good value,” he added.

It is estimated that if the projects go for liquidation, PFC will have to take around 80 per cent hair-cut. But otherwise in case of promising projects, depending on demand, the company hopes to make a good recovery. It is estimated that PFC has an exposure of above Rs 19,000 crore with regards to stressed power assets and Rs 8,100 crore worth power projects are being resolved through the NCLT route. PFC has made a provisioning of 52 per cent against the stressed assets, which the company believes is adequate to protect its future profits. PFC said that GVK Ratle Project worth Rs 811 crore have been upgraded to ‘standard asset’ from NPA category in the coming quarter. Further, 100 per cent principal recovery of around Rs 1,400 crore has been offered by borrowers like Dans Energy, Shiga Energy and Essar Transmission.