Wind turbines (Photographer: Daniel Acker/Bloomberg)

Power Finance Corporation Says Stressed Assets At 11% Of Loan Book

State-run Power Finance Corporation Ltd. said 11 percent of its total loan book is stressed, contributed entirely by private sector borrowers.

The private sector comprises 18 percent of the non-banking lender’s total loans worth Rs 2.79 lakh crore, according to a statement by the state-run company. “We are making sincere efforts to make these stressed assets standard in due time,” Chairman and Managing Director Rajeev Sharma told BloombergQuint.

As of March, PFC’s gross and net non-performing assets stood at Rs 20,600 crore and Rs 26,703 crore, respectively. The company said that it expects Rs 4,600 crore of its government NPAs will get an upgrade in the current financial year.

BloombergQuint had reported in March that around Rs 17,000 crore of the non-banking lender’s loans to private companies are at risk of turning bad after the Reserve Bank of India did away with debt-restructuring schemes and set stricter deadlines for the resolution of non-performing assets.

Also read: Power Finance Corporation Sees Higher Bad Loan Risk In Private Sector

For the quarter ended March, the company posted a net profit of Rs 935.6 crore as against a Rs 3,409 crore loss a year ago. Revenue for the quarter stood at Rs 6,162 crore versus Rs 5,719 crore year-on-year.

Greater Emphasis On Renewable Energy

The lender is also exploring opportunities to increase its portfolio in renewable energy as business in thermal energy is drying up, said Sharma. “We’re funding and refinancing more renewable projects. We have to orient ourselves accordingly.”

PFC’s exposure to renewables has increased to 3-4 percent, up from one percent a few years ago. “By 2020, our exposure to renewables will be around 10-15 percent.”

In the previous fiscal, PFC disbursed Rs 9,000 crore for renewable energy projects.

Its other investments include:

  • Funding infrastructure company Infrastructure Leasing and Financial Services’ renewable energy portfolio.
  • A Rs 12,000-crore lift irrigation project in Telangana. The project comprises electro-mechanic parts for which Rs 2,000 crore has been disbursed.

PFC is also exploring the possibility of funding railway electrification, LNG pumping stations, electric charging infrastructure and battery manufacturing units for solar power projects.

We have revived some assets which were under stress earlier like the Alaknanda GVK Project and two projects in Sikkim that did not have long-term power purchase agreements. With our efforts the power purchase agreements have been signed and the projects are supplying power.
Rajeev Sharma, CMD, PFC