MUMBAI: Rural Electrification Corporation Ltd, a public financial institution and one of the major players in financing India’s power sector, has reported a jump in gross NPA levels from 2.99 per cent in Q3FY18 to 7.15 per cent in Q4FY18 after RBI came out with the revised framework on resolution of stressed assets in February.
REC has classified loans amounting to Rs 9,591 crore as NPAs following the guidelines as a matter of prudence, the company management said, clarifying the RBI notification is not applicable to the company per se. Gross NPAs for Q4FY18 would be at the level of 3.14 per cent if REC would not have adopted the RBI guidelines, it added.
Net profit, total income
REC has reported 36 per cent dip in standalone net profit at Rs 834 crore in the quarter ended March 2018 against Rs 1,319 crore in the corresponding period a year ago.
Its net profit for the year has been the lowest in the last four years at Rs. 4,647 crore, down by 26 per cent, from the previous fiscal mainly due to NPA recognition. Total income for the year dipped to Rs 23,101 crore from Rs 24,361 crore in FY17.
At the same time, REC has seen 28 per cent growth in loan sanctions during FY18. The company has approved loans amounting to Rs 1.07 lakh crore. Out of this, around Rs 53,224 crore was sanctioned to the power generation and Rs.40,541 crore to transmission and distribution sector.
Renewable sector has seen just Rs.7,034 crore sanctioning which constitutes not more than 1 per cent of the total. At the same time, the share of renewable in REC’s funding has grown by 7 per cent in FY18 and this trend is likely to continue.
According to P V Ramesh, Chairman and MD, REC, the company is actively looking at opportunities in the renewable sector.
“We would like to see the share of renewable energy sector in the total funding to grow to 4-5 per cent by 2022,” he said, adding that project around e-vehicles, smart grid and smart metering, solarisation of irrigation pumps are the emerging areas which require funding.
REC has already funded several projects in the rural irrigation space in Andra Pradesh, Madyha Pradesh and few other states.
Loan book
REC’s loan book has grown by 19 per cent to Rs 2.39 lakh crore as on March, 2018. “We are expecting around 12-15 per cent growth in FY19 as we are working on a larger base this year,” Ajeet Agarwal, Director (Finance), said.
According to Agarwal, the NPA levels are not expected to growth further. “We are making efforts to bring it down. Around 20 per cent of current NPAs could as well be resolved as discussions on these several cases are currently going on,” he added.
REC is actively participating in the discussions on each NPA case along with other lenders, the management added.
“The public generally thinks that once the asset becomes NPA it means that the asset is gone, but in many cases, the assets are good, efficient and even performing, but for some reason they are not been able to service debt. These reasons vary from project to project, but what is important is to try and find the resolution path for each such asset,” Ramesh said.
Source: thehindubusinessline
