PTC India Financial Services' H2FY22 performance will be better than H1FY22: Pawan Singh, MD & CEO

Pawan Singh, MD & CEO, PTC India Financial Services Ltd (PFS), talks about the ongoing demand situation, business outlook, Q2FY22 results and plans to diversify the portfolio among others during a candid chat with Zee Business' Swati Khandelwal. Edited Excerpts:

Q: What kind of demand is visible and what is your business outlook for the company and do you think that the H2FY22 performance will be better than the performance of H1FY22?

A: Definitely, it will be better than the first half. I would like to inform you that last year, we made a disbursement of Rs 2,600 crore, and this year, we have made a total disbursement of Rs 3,000 crore, while the whole month of December is left. Maximum disbursement happens in the last quarter, which means we have a complete quarter and a month in our hands, at present. We sanctioned Rs 4,000 crore last year while we have already sanctioned Rs 4,000 crore by now, this year. So, we are expecting a good growth potential this year in comparison to the last year. We have a sanctioned budget of Rs 7,500 crore and we will meet it. We have a disbursement budget of Rs 5,000 crore, we will just not meet it but will also cross it. 

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Apart from this, we have good pipelines and we are moving forward to be a Green Infrastructure Finance Company and have reduced thermal a lot. The carbon footprint has reduced considerably in our balance sheet and has reached a single digit, it used to be 50% around three years ago. We expect that by the year-end, we will reduce our thermal exposure to around 6%. Secondly, we had a small pressure on our system for the last three to four years as we had some stress in our thermal assets. If you will look at our thermal assets, you will find that our thermal assets have reduced significantly leading to a huge decline in our stressed assets. Our net NPA figure has increased by almost 100% in comparison to the last quarter and the figure stands around Rs 280 crore. Interestingly, there is a possibility of recovery of more than Rs 280 crore in a quarter or maybe a month. 

So, the business model we have has now come to the fore. We hope to do well on all the fronts as I mentioned the figures of sanctions and disbursements. Directionally, we are moving on the right path, such as the government has a focus on green infrastructure. The COP-26 that ended recently had a special focus on green infrastructure and sustainability development and we have been preparing ourselves in this direction for the last three years. We have already forecasted that these things will happen. COVID taught us that what is good for sustainability and the environment is going to be good for the economy. So, the results of what we did are coming out now in form of our work. We are quite upbeat and fortunately, the new proposals reaching us are in the same area. Although we were into renewable in form of wind and solar. We also entered into bottle sanitation and we are getting new proposals in it. In the case of e-Mobility, the Prime Minister has launched the first e-Mobility project of 750 buses in Lucknow and PTC India Financial is its regional financer for it and we are the pioneers in that. In addition, we are also getting several proposals related to sustainability in form of waste to energy, waste management, water systems and many more.

Q: In the Q2FY22 results we saw that there was a growth in your profit after tax but NII was almost flat. Is it due to less provisioning?

A: As I said, our provision cycle has come to an end, i.e., the provisioning numbers that used to come earlier will not come now. Provisioning numbers are not included in NII, thus these numbers do not make any difference to NII. The NII has increased by about 13% from the corresponding quarter, i.e. Q1FY22. NII is also related to growth. Our growth numbers are going to be good as we did not make sanctions and disbursement in the first two quarters of the last year due to COVID and were focusing on consolidation and system improvement. We have made more sanctions and disbursements in the first two quarters and a month of this year than what we did in the entire last year. The increase in book size has a direct impact on NII. So, you will see that our NII has increased by around 13% in the second quarter in comparison to the first quarter. Going forward, there will be an improvement in our NII numbers. NII also has a second factor apart from the growth in the loan book and that is that NII is also related to the fact that when the stressed assets are resolved its income also starts coming to our revenue. So, a number of our stressed assets have been resolved including IL&FS which has been resolved recently and its impact will be seen from this quarter. In the next quarter, we have stressed assets of Rs 280 crore and we will get its payback and its income has not been added to the NII, yet, as it was not being recognized. So, when the NPAs go down then all the incomes of the stressed assets are added in income. Growth and revenue income arising of stressed assets - where we were not recognising the revenue income - after the resolution. Thirdly, NII is also a factor of the cost of borrowing and you will get to see that quarter after quarter, we have been able to reduce the cost of the borrowing.

Q: You have said that you would like to diversify your portfolio. Please throw some light on it and what is the status and segment where more demand is visible? Also, tell us about the recoveries that have been made?

A: As far as assets quality is concerned, we have made a lot of changes in our model. In our model, we have started to avoid long gestation projects. We are picking up projects where power purchase agreements, concessional agreements are already available and we are aware of the tariffs as well as the land that has been acquired. Going forward, we will focus on the quality of assets. We have reengineered our model in the last 2-3 years and the numbers I have talked about the stress that has been resolved is due to the old assets. There hasn't been any pressure on our assets in the last 3 years. There is something SMA 0 and we don't have an asset in this SMA 0 as well. So, we are marching forward in this area. I would like to inform you that we have a CLI segment, which is a very large segment and we are specialising ourselves in it. It is a segment in which we do not make PPA with third party states but with the good counterparties developers who have counterparties like Siemens, Google, Infosys, UltraTech or Grasim, and make payments in a day. So, we have focused a lot on this area and a lot of business opportunities are coming on the way. The second area is water sanitation and a lot of work is happening on the front. In the e-mobility, we have sanctioned two proposals and will take one more proposal in this board meeting for sanctioning it. In addition, HAM projects for roads that are growing at a good pace constitute 11% of our portfolio. It is also an important part of our business.