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Have increased loans to renewable energy business: PTC Fin

According to reports, non-banking financial company PTC India Financial Services has increased its loans to the renewable energy business, Pawan Singh, Director and CFO of the company tells CNBC-TV18. Singh is optimistic on the company’s asset quality and business growth. PTC’s net interest margin for the March quarter was 6.04 percent and for FY15 as a whole, it was 6.3 percent. Gross non-performing assets stood at 1.28 percent of the total assets.

Below is the transcript of Pawan Singh’s interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.

Reema: For the last two quarters your profit has been declining. This quarter your profits fell by 65 percent, in the previous quarter as well your profits were down close to about 50 percent odd. You have spiked up your provisions considerably this quarter. Are you sensing a worsening in the asset quality in the coming quarters which is why you have decided to provide more? Can you walk us through the rationale?

A: The provisioning this time has been done on a very conservative bases as it has not come out of nay statutory requirement but voluntarily we have decided to do so wherever we felt that there is some anticipation. However, it is not so much of a concern about the asset quality because the provisioning has been done on two main cases that is one of your equity investments where the plant is about 50 percent commissioned but then we are trying to recover the balance amount through arbitration and court proceedings. So, there voluntarily we have decided to make a provision. On the other case where it is a Konaseema, of course it has not become non performing asset (NPA) in our asset. Now the gas visibility is looking around the corner but still we have made a provisioning on conservative bases.

Sonia: Will you continue to make provisions in the quarter to come that is in Q1 and Q2? Ballpark if you could tell us how much could it go up by?

A: This is a one time provisioning which has been done and this doesn’t happen on recurring bases. These were assets with us for quite sometime. As I mentioned here that these two cases were historic, we were feeling that it was taking more time to kind of turnaround so we have made one time provisioning. This is a very unusual kind of provisioning which I do not anticipate on recurring bases.

Sonia: Since this is a one time number and it will not recur, can you give us an indication of what the financials could look like in the next couple of quarters both in terms of income growth and also what you expect to see in asset quality?

A: As far as the book size is concerned, we have been able to grow it by quite a bit about 30 percent. As far as our spreads are concerned we are maintaining a spread of above 4 percent. So as far as the business goes things do not look so disappointing for us in fact they look encouraging. Particularly that we have stepped up in renewable space, in fact now 40 percent of our asset is in renewable. Going forward also the thrust is going to be in renewable. The government of India has embarked upon a program never before to expand renewable sector that even we hope to have a lot of potential. Also renewable is bereft from normal problems which are there in energy sector like coal supply and longer gestation period so going forward we are fairly optimistic on the business growth as well as the asset quality.

Reema: Could you just us what the NPA was in this quarter, in the previous quarter we knew it is Rs 428 crore. Could you give us the exact figure in Q4 as well as what your net interest margins were?

A: Our net interest margin has been 6.30 for year and for the quarter it is 6.03. Gross NPA is Rs 428 lakh so in crore it is Rs 4.28 crore only. In terms of percentage of our asset the gross NPA is only 1.28 as of now. In terms of net NPA percentage of the total asset it is 1 percent.

Reema: You indicated that a lot of the provisions are one off so going forward can you tell us what would be the average provisioning that the company will have to make?

A: Normally we are supposed to make a standard provision of 0.30 over the asset. On the conservative basis in our company we have decided to have 0.50 percent as the provision on the standard asset. We will continue to have this kind of provisioning as part of the practice.

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