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Lending To Transmission And Distribution Companies Boosted Earnings, Says PFC

Power Finance Corporation said it is exploring new areas of business like waste-to-energy and sewage water treatment.

Electricity pylons stand at a thermal power station. (Photographer: Dhiraj Singh/Bloomberg)
Electricity pylons stand at a thermal power station. (Photographer: Dhiraj Singh/Bloomberg)

Power Finance Corporation Ltd.’s profit for the quarter ended March nearly tripled on the back of strong growth in funding transmission and distribution companies, according to its Chairman and Managing Director Rajeev Sharma.

“The company has been successful in reducing the cost of funds by 30 basis points in the three-month period, and has increased funding to transmission and distribution companies by 400 basis points in financial year 2018-19,” Sharma told BloombergQuint, adding that he expects the company to maintain its growth momentum in the coming years as well.

The company, he said, is further exploring new areas of business like waste-to-energy and sewage water treatment.

Stressed Assets

The government-owned lender to power projects is awaiting new guidelines from the Reserve Bank of India for resolution of stressed assets, Sharma said, adding that the company is working towards resolving some of its stressed assets outside the National Company Law Tribunal.

The state-run firm has already resolved one of its projects in Jammu and Kashmir and is likely to recover 100 percent principal from three other projects in the near term, Sharma said.

Power Finance, which currently has 15 projects under the NCLT, is aiming to resolve 14 projects outside the country’s quasi-judicial body.

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Other Highlights

  • All 17 lenders have approved the proposal by Adani Group for GMR Chhattisgarh.
  • Government made many efforts to remove stress in the power sector.
  • Looks to increase foreign currency borrowings going forward.
  • Plans to issue bonds in the coming quarter .
  • Aims to diversify borrowing and reduce costly loans through prepayments.
  • Appointed a consultant to examine pros and cons of the REC merger.
  • Expects merger to be accretive to profitability and network.
  • Exploring possibilities of funding charging stations for electric vehicles, railway electrification
  • Expects to increase share in renewable energy

Q4 Earnings Highlights (YoY):

  • Net interest income jumps 46.2 percent to Rs 2,656.4 crore
  • Net Profit surges 166 percent to Rs 2,117.56 crore
  • Revenue rises 23.1 percent to Rs 7,701.12 crore
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Watch the full interview here: