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PTC India Financial Services Ltd
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Ladies and gentlemen, good day, and welcome to analyst and investor conference call to discuss Q1 FY '24 results of PTC India Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinav Goyal, Vice President from PTC India Financial Services Limited. Thank you, and over to you, Mr. Goyal.
Yes. So thank you, and a very good afternoon to all investors and analysts, and we are pleased to welcome -- a warm welcome for discussing Q1 financial year 2024 results. So as have been seen that this time we are having a result much but time we have broken the trend which we were following last year. And now we are on the path of having our regular result with all compliance. So today, we are having our Managing Director and CEO, [ Rajib Mishra ]; Director Finance and CFO; Mr. Mahendra Lodha, who is also a chartered accountant. One imminent chartered accountant having years of experience in the relevant area. We are having Mr. S. Naveen Kumar, who is our Executive Director, Credit. And having ES, I should say, decades of experience in banking sector. We are having Mr. Sanjay Rustagi, who is the Senior Vice President, and we are having Mr. Devesh Singh, who is Vice President. So over to you, [indiscernible].
Yes. Good afternoon, everybody. Hello. Good afternoon, everybody. Yes. So I will just highlight a few things regarding the PFS. We've now fully functional board there, along with the 3 independent directors. I will highlight [indiscernible]. She was Chairman and Managing Director of Corporation Bank, another one, a very senior IF Officer. She was [indiscernible] fully functional board in there. Now we are strengthening our senior management team. So we already recruited the execute direct credit had internal audit had HR resources head for finance director comes also been funded. And the Chief Compliance Officer as well as Executive Director monitoring the recovery is in the process of joining. So most likely they're likely to join next week. So I think issue is related to all matters of resolution of 3 independent directors have also been sector. So we have unqualified order to port for financial year 2023 completely as well as unqualified audit report for Q1 of '24. So in financial year 2023 was around INR 176 crores, we declared dividend of 10% for financial year 2023. And again that unqualified audit report we got a Q1 of financial year '24. So we has achieved a part of around INR 36.7 crores for Q1 of financial year '23. So start accounts are also being resolved and came with resolution for the all the NPA accounts and focus is on improving the performance. So capital EBITDA ratio is also we are at a comfortable level of 34.9% is majority in the form of ran. Net interest margin is around 4.33%. Debt-to-equity ratio is also around 3.05x. So we are at a comfortable cash flow evolution with liquid funds of around INR 553 crores, including its PLA. So net worth of PFS is also around INR 200 crores. And market top of PFS is around INR 1,450 crores plus. We are having a loan book of around INR 7,452 crores. So their decline, we still have also removed route from the last year and the reformer waiting in. So we are having proposal lots of more than INR 1,000 crores, which I mentioned. So we are in the fund on more. So we can just do finalize amount. So, over to Mr. Shiva of [indiscernible].
Good evening, everyone. I'm Siva Kumaar . We have a good state of the proposals in the pipeline and also the divestment in the pipeline, we have more than INR 1,000 crore divestment also in the pipeline, which we are pursuing. And also, we are waiting at resolving some of our rest assets. And going forward, I think we will have a few and healthy book by end of the second quarter.
Sorry, your audio is little may externally speak a little louder plans?
Yes. We are expecting -- we are solving the pressure also. We are expecting that we will move towards a very clean book by end of the second quarter this financial year.
Yes. So that is some company side. I guess, we may say forward move to question and answer.
[Operator Instructions] First question is from the line of Sameer Dalal from Natverlal & Sons.
So I was there for your last year analyst meet that you also had. And one of the big problems you had discussed back then also was the fact that you were not able to get funds or were looking for raising funds, so you can start lending out. You already had certain proposals which you could fund and things like that, and you were expecting some funds to come in from particular overseas body. Any progress on either of that? And where are we getting -- I mean, where are we getting stuck when it comes to raising funds for giving them out against the sanctions that you have?
Yes. So that even in the second last meeting we will decision for raising product fund. But post that means there was some RBI directive and related media reporting. So that was a time when we were in an advanced stage of discussions to summon the process with the domestic lender has got today. So 2 of the lenders have requested us to date for Q1 partial 2024 result. So now the result has been over to -- after having this, we are again approaching our bank to have our appropriate consideration. So as we have a second of price line to us. Now as regards to overseas lending, we got a strength of $50 million from ICL U.K., which is under process of documentation. So this process is going on. And hopefully, in the next few weeks, we will be able to draw the limit the point in our account. So that is the state at as well.
Okay. And from the domestic lender, what kind of ability of fundraising would you have if all the things what you -- I mean, you said that once the results come, they will open up a line of credit. So what kind of line of credit can we expect? And secondly, what is your repayment schedule for the next 3 to 6 months? Because now whatever repayment is also going to be there, are they going to relend to you? Because at the end of the day, your raw material is money. And if somebody is saying, no, for whatever reason, we don't want to give money, you are not going to be able to raise the funds. So I'm trying to address what is your cash flow kind of situation in the next 6 months or 1 year?
So very early question. And of course, for any financial institution, not only as for any learning expectation again is morning only. So as regards to cash flow for retail, I guess you must have gone to our investor at presentation Page #17, where we have shown the cash flow position not only for 2 to 3 months, but no longer bucket as well. So there after 1 to, you may realize that in terms of liquidity at this part of the year, we are at a comfortable position. Now another question is what is the picture of having a line of credit from banks and financial institution from domestic market. Yes, we are in dispute we -- of the proposal has gone from branch to actual level for appropriate calculation. And our management is also in discussion with their management at top level, so as to expedite the further. We are quite hopeful that in time to come, we will be able to get a few sections to take the disbursement requirement for our [indiscernible].
Sure. And I'll ask one last question. It's in the same regard. There is something called co-lending, which a lot of institutions and banks are doing. Have you all thought about doing that for the time being. So at least you can get the ball rolling where part of the loan is borne by you and part is given to a bank through a co-lend at least your sanctions that you have and things can progress. Have you looked at that option at all? And are you if not, are you planning on looking at that option.
So I speak your question in 2 parts. First one is lead second one is co-lending, right. As a related activity, we already updated back we are in discussion with banks and financial institutions. So as whatever be the form, we can enroll, there is some outlook money from the organizing. So our first focus was to maintain appropriate ALM, which we are doing, which, as I mentioned, [indiscernible] from our investor presentation as well. Now as regard to full lending, we have initiated a few other things with our Executive Director, [indiscernible] over to you.
Yes. As regards to the option of co-lending, we are moving with a few other institutions to have our co-ending wherever it's possible. So the 2 proposals we can share with them and share the functions and other fees. So that option is now being discussed. And mostly, we will come out with a few proposals, we will end up co-lending with other institutions.
And in the co-lending that you all are looking at, any terms and conditions that you all have in mind which you will be following on the terms of those co-lending?
The conditions basically, we need to be mutually agreeable and mostly in the sector of the [Indiscernible] only. So that's the one which we are looking at. And it's an optimal stage with 2 or 3 institutions. We have bumped upon and take it well received by those institutions also. So we are in the process of exchanging information and going ahead.
[Operator Instructions] Next question is from the line of Deepak Poddar from Sapphire Capital.
So first, I wanted to understand now touching upon the fundraising part only. So how optimistic we are that we will be able to raise fund, I mean, in next 1 to 3 months?
So we are quite optimistic and that is the reason the across all levels are putting so much effort for resin. And that is the, I think, only challenge not only channel, but among the driving focus area for us. So the process is going on, as we mentioned, and hopefully, in time to come, there should be some good news for the company.
Okay. And was the quantum we are looking to raise?
So Quantum, although we have not affected ourselves to any indication. But yes, as of now, we are in discussions for INR 1,500 crores to INR 2,000 crores with various lenders, the request which has gone from our institution. And once we will be having some tension from a few of the vendors and probably will approach for more content.
And this INR 1,500 crores to INR 2,000 crores of -- I mean that's where I talk that we are likely to raise over the next 3 months? Would that be a fair -- I mean, a fair thing to assume?
Yes. So that is the amount for which the efforts are going on, and we are working hard to achieve that. So that is our time target.
And in what form would that -- this debt be actually? I mean, would it be in terms of your debt or in terms of entities or something else?
So actually not immediately, it will be in form of EPV to the extent, INR 400 crores, as we mentioned that we are having a tension of $50 million on utilities documentation is going on and probably in time to come. Now if we convert $50 million into INR it amounts to roughly INR 400 crores, and that probably will be in form of bank credit line, long term credit line.
Bank credit line. Understood. And sir, is the -- this would be the -- I mean, if you see last quarter, our loan book has been stagnant at around INR 7,000 crores to INR 7,500 crores, right?
So I think there we also look at the situation when we back booking intent and another way that there is a stability and the bottom is where even before last quarter, every quarter we were declining. So it's over to you how we look at things, but that is a fact evolution.
Okay. But how do we see that? I mean, you have to see this year, what sort of loan book we are targeting in maybe next year? So any kind of light you can provide there?
Our first target was to ensure that the things will move in the right direction for which we are working and one of the area where we got uses been published well at times. And I think last year, you are expert that even being public in the month of July. Now every effort is to refund. So once the fund will track the organic and the quantum has already been shared just now. So then that amount will be utilized for the amount lending -- so as of now, we are not focusing any specific amount that -- I mean like we will do INR 5,000 crores or INR 8,000 crores. We're focusing that slowly and gradually. But of course, patiently, we will start moving. So one will start moving, then probably that would be the right time to catch up the phase and to deliver more.
Correct. But have we started getting price disbursement, we have started, right?
We did it from the investment we mentioned in our investor presentation in Q1 as well. We did some tension as well to INR 332 crores of disbursement. We get in Q1 financial year 2024. And this quarter also, we are working for making some investments.
Okay. Understood. And in general, what sort of ROE we might target in our business?
Sorry?
What sort of ROE? What sort of ROE we can target in our business on a steady-state basis?
It's around 1.5% we are looking at the ROE for us and given the situation or trying to achieve those numbers.
Because currently, we are at 2.1%, right?
Yes.
Okay. So I mean, by a lower range, I mean, is there any additional cost that we expect to come?
So there's a marginal increase in our cost of borrowings. And beyond the level, we will not be able to pass our lower cost also to have a quality asset, so that's the one in which we are looking maybe a few basis points one here and there for. And it will be more or less in line, maybe 2 bps, we will get reduced when what was there in the [Indiscernible].
[Operator Instructions] The next question is from the line of Vignesh Iyer from Sequel Investments. Sir?
Yes, just to understand some wrong in the last quarter earnings call, can you give a target out size of INR 9,000 crores AUM for this quarter? I mean looking at the similar target, I mean, we are maintaining the target for this financial year?
So the target of an of INR 9,000 crores, yes, we are quite hopeful that by end of this financial year, we should be able to achieve that.
Okay. And what is the comparable level of debt equity that companies I mean, the inventory is just they're comfortable in reaching?
So if you look at our debt, we are far, far more than the comfort being required. So we are just 2 times. So that way, we are optimal in terms of debt equity. And normally, NBFC can have a level up to 6x. So if we look the kind of room agile to us and the kind of room we are utilizing as of now, there is enough passion to do business in terms of debt equity and capital align.
Okay. And what would be -- what is -- what will be our cost of borrowing for this year? I mean, what are we eyeing? I mean, this...
It is in line with the global trend only. So globally, the boring cost has been increased. So globally, if you look at a market, there is an increase.
[Operator Instructions] Sir, you may go ahead.
Yes. So first, our apologies, there is some technical glitch because of that being dropped out of call. But yes, we were at cost of borrowing . So if you look at the scenario in general than in last 1, 1.5 years, there is an increase across the globe due to high inflation. And the increase has happened in domestic market as well upwards the levering comparison. Now if we look at the company financials, we were at just 8.35%. So that is -- we would be quite reasonable and quantitative in comparison of similar rated any NBFC in the country. So although, again, there is some increase in the borrowing course is expected. As regard to that increase, we are having a policy, we are having a methodology where there is any increase in the borrowing cost that has to be passed on to a borrower. So for that, we are following a PFS VR mechanism so for that, we are having a meeting on a quarterly basis to remove what is our borrowing cost and other operation costs. And if any correction we require in our lending rate so that correction being made and accordingly, the cost being passed on to our core.
[Operator Instructions] Next follow-up question is from the line of Sameer Dalal from Natverlal & Sons.
Just a quick question on the recovery side. Last time we had met also, you said you all were working actively on certain recoveries of loans and they were expected that some recoveries from the gross NPA side might start coming through for where provisions were made to a very large extent. So any update you can give us on that or any expectation of any recoveries in the next 3 months, 6 months?
We are expecting around INR 400 crores of assets in the gross NPA will be resolved by a very short possible time that in was an asset which is almost in the range of recording. We are in the process of executing the documents and the unintended INR 25 crores and the INR 120 crore assets, we are expecting a resolution anytime now because the matter is at NCLT and other final orders.
Sure. So you said about INR 300 crores, INR 400 crores. And this Danu Wind Park Limited, where the provisions are still limited. Can you give some thought on what is the expectation on that one, which is kind of large INR 282 crores, where provisions are only about INR 43 crores?
Absolutely right. That is the one which we are taking it. We are expecting this will be resolved or we have made various strategies for recording these assets, and we are working very closely with the promoters as well with the other stakeholders for resale. We have various strategies. We are evaluating and we are finalizing -- and we expect that we will resolve this account also by end of this quarter.
Okay. So you talked about Meenakshi, which is the INR 150 and the rental power, which is INR 135. So those 2 plus this 282. Is that fair to assume these 3 are at the last stages?
Absolutely... That's what -- and the other one is [indiscernible] there that we are examining, and we'll be taking to -- we are doing the new divisions, and we'll be putting up together dilated ability for it.
Sure. And that NFL is fully provided for INR 125 crores, right? So whatever comes will be a full recovery?
Absolutely right.
And any progress on the IL&FS Tamil Nadu Power Company?
[Indiscernible] also it is -- the consortium is in the process of taking the remains rating for the restructuring. Once that is there, and we expect that we also will be to cellar resolved. And there are enough funds available also in the TRA. The sharing of the one which is static. So once the researching processes, then I think this fund among the lenders. So we are also expecting a lesion year by maybe by that quarter.
Sure. And this one is also fully provided, right? I mean, including your impairment reserve, which you are holding. So there's nothing outstanding -- there's no more requirement of provisioning for any of these, right, apart from Danu?
Yes. We have a bitrate provision in line of salary. And we expect normal provisioning been post restructuring of that.
No. What I'm trying to say is you -- the impairment reserves that you're having of INR 147.5 crores, I mean, in case of whatever resolution whatever, there will be no more requirement of doing any provisions for any of these 5 assets that you mentioned, apart from Danu, of course.
I just want to add one point here. So the impairment reserves represent the difference between the provisioning as per the [indiscernible] and as for the recon as per the RBI. So in the INR 94.1 crores has been my P&L account, whereas INR 147.1 crores is an appreciation of reserves. So with respect to INR 94.1 crores in presale have, which is adequate provisioning in sense. It is based on the resolution plan, which has been placed, which got RP over rating from one of the rating agencies as well. So we are hopeful to get the second anticipating for the same resolution plan. And if that resolution plan goes through, then we are not required to make any additional provision apart from the INR 94.1 crore.
Yes, that answers the question. Thank you very much.
[Operator Instructions] Sir, we don't have anyone in the question queue.
Yes. So we may proceed for conclusion.
As there are no further questions, I would now like to hand the conference to Mr. Mahendra Lodha for closing comments.
Yes. So thanks a lot to intervene here and the problem whatever is because on the company's side based on the results recently probably placed on '23. Thank you a lot.
Thank you very much. On behalf of PTC India Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.