PTC India Financial Services Ltd

NSE:PFS

Earnings Call Analysis

PTC India Financial Services Targets Strong Growth and Improved Asset Quality

In the latest earnings call, PTC India Financial Services reported marginal growth in revenue, totaling INR 163 crores, with profit after tax increasing to INR 47 crores. The company aims to resolve legacy issues and improve asset quality, targeting a net NPA of less than 2% by March 2025, down from 5.8%. They expect a 15% growth in assets under management and have set a goal for significant recovery of stressed assets by Q4. The provision coverage ratio has improved from 40% to 63%, marking a commitment to financial stability and growth.

Transformative Journey: Navigating Legacy Issues

In the recent earnings call, management highlighted a pivotal phase of transformation aimed at resolving past legacy issues. This initiative is crucial as the company intends to reorient its operations to regain stability and foster sustainable growth. The leadership emphasized a commitment to improving internal processes and achieving a stronger governance framework. This effort is geared towards restoring investor confidence and elevating overall operational standards.

Financial Performance: A Mixed Bag

For the quarter ending September, total revenues recorded a slight increase to INR 163 crores from INR 161 crores. However, the profit before tax jumped from INR 59 crores to INR 63 crores, showing profitable momentum. The profit after tax also improved, climbing to INR 47 crores compared to INR 44 crores in the preceding quarter. Despite minimal revenue change, profits reflect enhanced operational efficiency.

Growth Aspirations in Challenging Times

The management set a clear guidance of targeting a 15% increase in assets under management (AUM) for the financial year. They aim to end the year with a net non-performing asset (NPA) ratio of less than 2%, significantly down from the current level of approximately 5.7%-5.8%. This ambitious target aligns with their broader goal of positioning the company for 'cautious growth' while navigating the recovery of stressed assets.

Asset Quality Improvements: A Key Focus

Management indicated a robust provision coverage ratio of about 63%-64%, a substantial improvement compared to 40% in the previous year. Moreover, they are targeting to resolve stressed assets contributing around 2.3%-2.4% of their book value. Plans are in place to realize these assets by the end of the current financial year, enhancing the overall asset quality.

Strategic Focus: Expanding into Infrastructure

Shifting focus, the company aims to diversify from being primarily an energy finance player to a more comprehensive player in infrastructure. This includes prioritizing investments in smaller renewable projects (5-15 megawatts), enhancing efforts in roads, wastewater, and solid waste management, and exploring opportunities in e-mobility solutions. These strategic moves are intended to spread risk while tapping into growth segments.

Liquidity and Funding: A Stable Outlook

The company reassured investors of its ample liquidity to support growth aspirations without immediate additional funding needs. However, plans to diversify borrowing sources beyond banks – potentially entering the bond market – are in view, conditional on improvements in the company’s credit rating.

Reflection on Employee Engagement and Culture

Management underscored the importance of enhancing employee engagement as a critical part of their strategy. They plan to invest in skill development and foster an organizational culture that prioritizes ethics, collaboration, and ownership to improve performance and outcomes.

Navigating Future Challenges with Caution

As the company transitions, they acknowledge the potential turbulence associated with change. Success hinges on executing their strategy effectively within the marketplace. The management has committed to emphasizing processes that safeguard against previous operational pitfalls, ensuring a robust oversight mechanism for asset management.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to PTC India Financial Services Limited Q2 and H1 FY '25 Post-Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Priya Chaudhary. Thank you, and over to you, ma'am.

[Priya Chaudhary, executive]

Thank you. Good morning, everyone. I'm Priya Chaudhary. I'm part of the Investor Relations team at PFS. I would like to take this opportunity to welcome all for today's investor presentation call for the discussion on Q2 and H1 results for financial year '25 for PTC India Financials.

Now just to set the context for the presentation. PFS has undertaken a transformation journey aimed at resolving legacy issues, institutionalizing internal processes and systems, strengthening management and enhancing employee culture and engagement to ensure a sustainable growth going forward. Our commitment to governance and our continued focus on business will ensure that PFS will continue to strive in an ever-changing dynamic financial landscape.

I would now like to introduce the senior management of PFS present in today's call: Mr. R. Balaji, he is the MD and CEO; Mr. K. Srinivas, he is the Executive Director; Mr. Abhinav Goyal, he is the VP and Interim CFO.

With this, I would now like to hand over the call to Mr. R. Balaji for his opening remarks. Over to you, Balaji.

[Sh. Balaji, executive]

Thank you, Priya. Good morning, all. So PFS had a quarter, the results are already published on the website. So what I would like to share before Abhinav would take you through the financial, give a brief overview of what transpired in quarter 2 and what is our way going forward. And Abhinav would take you all through the financials, and then, we can open the floor for questions, which my entire senior team will be there to respond to.

Quarter 2 was a quarter of where we witnessed significant change and wherein we initiated the steps for transformation. You are all aware that in the past couple of years, PFS has been assigned by a variety of PSU. And going forward, we are actually moving forward to resolve those and take forward the company on the path for strong growth. The way we are seeing it in our journey, we are seeing it like a 3 plus 1. The 3 critical tasks which we are doing is, one, resolve legacy issues, that's one; two, get business back on growth; and three, more importantly, improve and strengthen portfolio quality. These are the 3 things.

So, one, as far as resolving legacy issues, we are in active dialogue with the various regulators, ensure that their concerns are addressed; two, to achieve it, moving beyond assurances, strengthening systems and controls and putting all the processes in place. This is what we have done. And this would be clearly visible by what we have seen in the quarter 2 results. Compared to the year-ending March or quarter-ending June, the number of qualifications on our financial statements have reduced significantly. We are committed to uphold the highest standards of governance, and going forward, we'll be upgrading our processes and ensure that things are on a smooth track.

Two, getting back on growth. We have made a conscious decision last quarter we need to grow. But when we say we need to grow, we need to grow in a sustainable and profitable manner. So what we are doing is focusing on projects and proposals which give us a superior risk-adjusted return on capital to ensure that our profitability is maintained.

Today, if you look at quarter 2, we had a post-tax return on assets of 3.1%. This compared favorably with last year same quarter -- last year's of 2.4%. Going forward, what we will do is as we start leveraging, the return on asset would come down while the return on equity would increase. But going forward, we want to ensure that while our book increases, our return on assets remain in a healthy card.

And third and more important, like what I said, is to improve the portfolio quality. This is very important because if we need to grow sustainably, access to adequate sources of liquidity or funds at a competitive rate is a pre-requisite, and for that, we need to focus on enhancing our credit rating. And one of the key criteria for the credit rating is how do we improve the asset quality. Because currently, if you look at our Stage 3, net Stage 3 is 5.8%. But 2 conscious things I would like to highlight you. If you -- while the percentages might look high, if we look at the absolute numbers, compared to last year's September quarter, in this year's September quarter, our gross NPA has declined by 23% in value terms. That's one thing which we have been doing.

Second thing, what we have been doing, is ensuring that for the assets that are provided for, our provision coverage ratio increases significantly. Today, our provision coverage ratio is around 63%, 64%, which is a significant layer compared to the same period last year, then it was about 40%. So these are the 2 which we are doing.

Going forward, we expect a substantial resolution in the stressed assets. One key development, which has happened in quarter 2, is that one of the stressed assets, which contributes approximately 2.3%, 2.4% of the book, we had a successful bidder through the NCLT process, while for any case that goes to the NCLT, there will be a lot of challenges and counter challenges. At least we have resolved it significantly. We expect the actual realization of the process more likely to come in by quarter 4. So that's something significant progress, which we have made.

Alternatively, we had also a couple of other assets which have got a significant value. We are taking steps to ensure that these are resolved by the end of March. If it all goes according to plan, we hope to end the year ending March '25, that is this financial year, with a net Stage 3 or a net NPA of less than 2%, which is substantially lower to the current 5.7%, 5.8%. That's something which we intend to do.

So these are the 3 which we are doing: resolving legacy issues, getting cautiously back on to growth and improving portfolio quality. Because once if we do this, we'll be able to get access to more sources of liquidity. But I say 3 plus 1. To do this, one, the most critical factor is increasing and enhancing the employee engagement. We have got a good team to ensure that they are able to cope up with the new requirements. We'll be investing a lot in the skill upgradation, giving them greater opportunity so that by unleashing the passion of the employees and the team, we'll be able to achieve whatever we intend to do so.

Now Abhinav will take you through in a brief period about our quarter 2 financials. After that, we can open the floor for questions.

[Abhinav Goyal, executive]

Yes. Thank you, sir. So a very good morning to all our team members. Now I will take you through the financial results. So the total revenue for the quarter ended 30th September was INR 163 crores in comparison to INR 161 crores. There is a marginal increase. And as MD sir was telling, we are working on 3 plus 1, so there is a lot of substantial improvement on the qualitative aspect.

Then, our profit before tax stood at INR 63 crores in comparison to INR 59 crores the last quarter. Then we are having a profit after tax of INR 47 crores. In comparison, it was INR 44 crores for the quarter ended 30th June.

During the quarter, we have reported our loan assets of INR 5,249 crores. On this aspect, we are working. So I like to mention that year till date, we have appraised the project more than INR 2,100 crores, which is being considered at various stages. Net interest income for the quarter was INR 76.95 crores. Our yield on earning loan was 11.97%. Our cost of funds has been increased marginally to 9.43%. This is one of the aspects on which we are working. And our interest spread is 2.54%. Net interest margin is 5.02%.

Our earnings per share has been increased slightly to INR 0.74. Our cost-to-income ratio is in line more or less in comparison to the last quarter, 12.43%. Our capital adequacy ratio, which is an indicator of our cushion for having a further growth and expansion is very good at 44.65%. Our debt to equity is very much comfortable at 1.27x. Our return on net worth is 7.27%, and return on assets is 3.08%. So our NPA for the quarter ended 30th September 2024 stood at 2.65%. And Stage 3 -- net of Stage 3 stood at 5.91%. So this is in brief all about financials.

Now I request moderator to open the floor for question-and-answer session.

[Operator]

[Operator Instructions] The first question is from the line of [ Suyash Bhave ] from Wealth Guardian.

[Unknown Analyst]

Yes. Sir, as we get -- in this year of stabilization, as we get back on our growth path, what kind of support can we expect from our parent PTC India? And what -- has there been any discussions of an additional funding or anything that you can disclose at this present moment?

[Sh. Balaji, executive]

Yes. Thank you. So 2 things. We are a listed company. So whatever we are doing, it needs to be at arm's length. So if you look into it, one, we got at this point of time ample liquidity. If at all any support is required, they have supported us in the past and that would happen. If you consider, for example, in September, our rating has been reviewed by CRISIL and where the CRISIL has reaffirmed our rating. I request you to go through the rating rationale given by CRISIL, wherein as a part of the rating process, CRISIL also met the Chairman of PTC and the leadership team of PTC, and they were convinced about the support that PTC is going to be extending to us.

Therefore, to summarize, if at all any support is required, it will happen. But at this point of time, from an operational perspective, we think we have got sufficient liquidity to manage our growth aspirations.

[Unknown Analyst]

Okay, sir. I just have one more question, if I may. In our latest investor presentation, what I can see is that for the H1 FY '25, loans sanctioned were around INR 500 crores and disbursements were around INR 566 crores. But for the quarterly breakup, it seems as if all of these loans have been extended in only Q1. So is it the case that in Q2 we did not do any loan disbursals?

[Sh. Balaji, executive]

You're right. In quarter 2, we evaluated quite a few proposals. Like what I said, we are doing a period of transition. So we are reorienting our approach to doing business, wherein only businesses which pass a specific muster in terms of return and risk will be able to go forward. So what you would see, while it's -- in any period of change, there will be a period of turbulence, we'll be more than making up for it in the quarter 3. So what you would see by the end of quarter 3 will be at a significantly higher level compared to end of June. In June, we ended our book at INR 5,577 crores. End of December, we'll be significantly higher compared to June levels.

[Operator]

[Operator Instructions] The next question is from the line of Akash Sharma, an individual investor.

[Akash Sharma]

Congratulations for...

[Operator]

Sorry to interrupt, sir. The management line has been disconnected. Please stay connected.

Ladies and gentlemen, the management line has been reconnected.

[Akash Sharma]

Am I audible?

[Sh. Balaji, executive]

Could you please repeat the question? Because we lost you.

[Akash Sharma]

Yes. Congratulations for the good set of numbers. So what will be the major segments that you will be focusing on in the next 2 to 3 years? And what are the plans? Can you please elaborate on the same?

[Sh. Balaji, executive]

Yes. Thank you. First of all, I would like to correct you. These are okay results. These are not good numbers. And going forward, we need to substantially improve on it. And now coming back, what we intend to do is focus on distributed infrastructure projects. Like what we alluded to earlier, we want to focus on superior risk-adjusted return on capital. So given our size and profile, we'll be focusing on smaller projects. So this would be in the energy segment, one, wherein we're focusing on smaller solar and wind projects, anywhere with a size of some 5, 10-megawatt to 15-megawatt, this would be a key area. The reason why we'll be able to do so is we'll be able to fund these individually and have a better control over the project execution and project monitoring. That is one.

Two, in the last few years, we have shifted to other parts of infrastructure like roads, wastewater, solid waste. We would intensify our efforts to scale up business in these segments. Doing this would provide us with a natural hedge against the concentration risk with any particular sector. That's two.

Three, we will be focusing a lot on e-mobility, especially in both in passenger mobility, passenger transportation and cargo transportation. Either though we have been one of the pioneers, we have done some -- few projects for state transport corporations across the country, we'll be going down the chain and focusing on even on private sector opportunity. So these are the 3 which we would be doing.

To complement this, we'll be coming out with other activities like focusing on transmission and distribution sector so that whichever infrastructure value chain we are operating in, we have come across as a full-scale ecosystem player rather than operating in one part of the ecosystem. This is what we would be doing. And to achieve this, our intent is to create solutions which are customer-centric. We would identify niches wherein our core skills of credit appraisal and project monitoring and risk assessment, it's a competitive advantage compared to others. Using this, we'll be able to focus on these niches and deliver a superior economic return.

[Operator]

[Operator Instructions] The next question is from the line of Riya Sharma who's an individual investor.

[Riya Sharma]

I want to ask you what exactly will be the comfortable level of debt to equity, and if you could provide some guidance on NIM.

[Sh. Balaji, executive]

See, debt to equity, as we grow, debt to equity will increase. And ideally speaking, if you want to say like in the long term, by FY '27, we'll be coming to a debt to equity of 3.5% to 4%. That would be our intent going forward. Now, how soon are we able to ramp up, whether it's end of FY '27 or middle of FY '27, it depends upon how successfully are we able to execute our transformation agenda.

As far as NIM is concerned, it has been historically high because of our low debt to equity, and more importantly, because of legacy projects which we have done. Currently, going forward, there will be a significant downward pressure that's being witnessed in the industry at large. Our endeavor would be to keep it upwards of 4%. That would be the thing so that we are conscious about it so that we are -- going forward in the medium term we are anywhere between -- around -- close to a 2.5% post-tax return on asset. That's what we'll be doing for it.

[Operator]

[Operator Instructions] The next question is from the line of Rajesh Kapoor who's an individual investor.

[Rajesh Kapoor]

I had a question regarding the outlook of 2025. So where do we see the company going in the next 1 year and also in the short term of 3 years?

[Sh. Balaji, executive]

So basically, as far as this financial year is concerned, like what I said, I said 3 plus 1, in the 3, 1, primarily, we need to put us on a strong pedestal for future growth. So legacy issues would have been resolved substantially, if not entirely. And our portfolio of quality would have improved significantly. The net NPA would be less than 2%, and gross in the region of 4%, 5%. That's what we'll be doing.

As far as the business is concerned, we'll be ending the year with approximately more or less on 15% growth in AUM compared to the previous year.

[Rajesh Kapoor]

I had one more question. How do you see the sector mix going forward? Can you please share an outlook regarding the same, like which segment particularly do you see performing better for us?

[Sh. Balaji, executive]

See, I think if we were a large player like a PFC or a REC, we have to work about the macro trends. Since we are a small player, we think for the areas where we are going to operate, that's a significant opportunity to growing all aspects. But coming specifically to your question, yes, smaller solar and wind projects, especially in C&I segment is a key thrust area going forward.

Two, secondly, what the union government in its budget has given two key things, one is focus on compressed biogas. That's a critical possible future growth area. And second thing is increasing the bio-ethanol in auto fuels of having a target of close to 20%. Therefore, bioethanol, these all would be then compressed biogas and bioethanol.

Apart from these 2 things, one key segment that would witness frenetic growth in the next few years would be energy storage solutions. As it is currently, the time between the peak power requirement and the peak power production, in the course of a day, there's a mismatch. And as a share of renewables in the grid increases, this mismatch is only going to increase. To solve for this, we require energy storage solutions, whether it be like battery storage or pump storage or whatever thing. I think these would start becoming more and more important going forward.

But I must caution that when these energy storage solutions become this, the results would manifest over a 5-, 10-year period. It's not like in the next 1 or 2 years, this would become like a significant opportunity. These are long-term trends rather than the results would manifest themselves over a period of time.

[Rajesh Kapoor]

Okay. Sir, again, in terms of the borrowing mix, we see last 3 years the borrowing mix has been more or less similar. Do we see any further changes going ahead?

[Sh. Balaji, executive]

That's a great question. So what we need to do, right, as it is, our borrowings is constrained by our ratings. So once we resolve the portfolio quality, and two, start getting back to growth, we'll be doing it. So the intent is once our ratings improve, we would start borrowing from bonds also because we cannot be reliant on only a single source, which currently is primarily banks.

The intent is that by -- it's a long-term intent, I can't give because these trends will manifest once of our rating improves from A- to A and AA. Then our ability to participate in the bond market will increase while it will make some small -- we can take some baby steps in the next 1, 2 years. The intent is in the long term, say, by 2030, our borrowing from banks should come down to 60% or so, with 40% from bonds and other sources. That's the thing. And a lot would depend on how well we are able to grow, and more importantly, how we are able to manage portfolio quality to ensure that we get the confidence of bond market participants.

[Rajesh Kapoor]

Okay, sir. That was very insightful. One last question, with regards to the credit standing, the NPL that we have, so we see that the NPA since the last September '23, you have decreased significantly. But in the last 3 quarters, there has been a very minor decrease, but a little good progress. So where do we see this going in the next couple of quarters?

[Sh. Balaji, executive]

See, these are all large ticket infra projects. So the resolution would be lumpy. We are putting in all efforts. Currently, if you look at it, if you have gone through our presentation, around INR 764 crores was the amount in gross NPA as of September. The target we would like to bring it down from at least by minimum 50%, ideally by 75% by end of March. So INR 764 crores would come to at least minimum INR 380 crores. But if things go as we have envisaged, it would be close to INR 190 crores.

[Operator]

The next question is from the line of Suyash Bhave from Wealth Guardian.

[Unknown Analyst]

Sir, from what I understand is we are looking at transitioning from mainly an energy finance player to a full-fledged infrastructure player, considering the diversification that you just mentioned. So I have 2 questions on that. One is, would that entail requiring hiring more talent with different capabilities, like considering the different segments that we want to enter? So what kind of effect would that have on our cost-to-income ratio? That is one question.

And second is, now that we are looking at a very different kind of a business process going from -- to go back on the growth part, and infrastructure finance per se has not had good success as in -- in India as in when you look at its past history. So what kind of different processes or a better control that we are looking at? If you can just elaborate on that.

[Sh. Balaji, executive]

Okay. One is, since we are a large ticket B2B player, our cost to ticket is significantly lower. It's not a very high proportion of our income, around, say, 12%, 13%. Going forward, we expect it to be in the similar range. So we don't see this because we are actually widening our reach and getting into newer niches these activities or these initiatives to have any significant impact on our cost-to-impact ratio. So that's what we are doing. And could -- sorry, what's your second query?

[Unknown Analyst]

As we go from -- as we look to pursue growth going forward, as you said, that we are looking at -- we're cautiously growing, so what kind of processes as in different processes would we want to bring in just to avoid any of the things that happened in the past with respect to control or oversight over the assets that we look to fund, if you can elaborate on any operational processes that we want to change or we are looking to change?

[Sh. Balaji, executive]

See, I would not want to get into the specifics, but I will go through the philosophy. Most of you would be aware at what had happened in the past. So the key thing, one, is to ensure it does not recur. Two, more importantly, to ensure that the organization is resilient enough to weather any such thing happens. So one -- the guiding philosophy which we are going is, one, enhanced system capability. So one critical thing as far as this is concerned is to ensure we automate to the extent possible so that the manual intervention in case of data generation, data preparation is minimized so that there's one source of truth across the entire organization.

What would be the benefit of this? The time required for data preparation gets reduced and people spend more time analyzing the information and taking decisions, which lead to higher quality decisions. This is the first one. Two, secondly, have a clear sense of what is expected, not expected so that it creates a culture of transparency and outperformance. This is the second thing.

Third, if you needed to make the organization more resilient, make people move across roles so that there are 2 types of growth when people go up, vertical growth, when they go from particular level to the higher level. Second level is the horizontal growth, wherein they move from role A to role B so that their skill set gets enhanced and their ability to take up high responsibility gets enhanced.

In short, what we are focusing on is how do we transition from an organization that is dependent on individual capabilities to creating a culture that institutional capabilities are getting built. That is the key pivot going forward, moving from individual capabilities to institutional capabilities. How are we going to do this? If you looked at the earlier presentation, we are speaking of a sustainable infrastructure where we do this.

So internally, we are adopting an eco-friendly approach, eco -- E-C-O. So basically, the thing that is being driven down internally in the organization is E for ethics. There will be no compromise on ethics and integrity. C, how we focus collaboration, how we foster a collaboration wherein people work together to deliver more as a team; and C (sic) [ O ], ownership wherein people, key leaders take ownership for their actions. Through this, we'll be able to put a system of outperformance across the organization, at the same time, uphold the highest standards of integrity.

[Operator]

[Operator Instructions] The next question is from the line of [ Pavan Sharma ] from [ BFS ].

[Unknown Analyst]

So my question is, can you please throw some insight on the sanction and disbursement guidance for financial year '25?

[Sh. Balaji, executive]

I think, Pavan, another person had raised the query earlier, like how would we put. We said we'll be expecting around 15% growth in that book. It could be higher. But the primary thing is getting the internal organization in shape for future in this. So now we can work out the numbers backwards. We do not want to give a very specific thing. But all I could say is by the end of quarter 3, in the first -- like at this point of time, on a half yearly basis, there are INR 566 crores of disbursement compared to [ INR 410 crores ] in quarters in last year. The end of quarter 3, this figure of INR 566 crores would have more than doubled when we come to the end of December quarter. It will be higher than that. But at this point of time, you can say, end of December, we would have more than doubled our disbursement, YTD disbursement.

[Operator]

The next question is from the line of Chintan Mehta from Puniska Family Office.

[Chintan Mehta, analyst]

Sir, just wanted to know after FY '25, once we stabilized, at lower base, it's possible to grow at 25%, 30% or we have plans to fund the higher ticket size project or we are planning to fund the lower ticket size project?

[Sh. Balaji, executive]

Sorry, it was not very audible. Can you please restate the question?

[Chintan Mehta, analyst]

Sir, after FY '25, once we stabilize, it's possible to grow at higher 25%, 30% rate? And second question is, we are planning to fund the higher size of project or higher ticket size projects or lower ticket size projects?

[Sh. Balaji, executive]

So okay, I don't want to answer all questions. So this question will be answered by Srinivas, who's Executive Director, Credit.

[Kalur Srinivas, executive]

See, as Balaji has indicated, this, of course, is a year of stabilization, and we are aiming for some growth definitely. Now, from FY '26 onwards, I think that is what your question pertains to, whether it is possible to target a higher rate of growth. Yes, I think once the things that we are targeting in the short term are in place, it is definitely possible to target a higher growth from FY '26 onwards, given the opportunities that are available in the space that we are in and the opportunities, of course, that I referred to are in the infrastructure space, tremendous opportunities in the country.

Coming to the second part of the question, in terms of the ticket size, that will be in the nature of something that will be changing over a period of time. I think once Balaji referred to in terms of a certain size, giving the example of renewable energy projects, that will evolve over a period of time as the business -- as the loan book also increases. I mean, today, we may -- given the size of the loan book, when we are targeting growth in the near term, of course, we will be conscious of single-party exposure. But yes, as and when the book size improves, we will be more amenable to take a larger single ticket exposures.

[Chintan Mehta, analyst]

And sir, in terms of exposure, we are looking for both private, public kind of or we are exclusively for the PSUs to fund?

[Sh. Balaji, executive]

It can be both in private sector as well as public sector. Today, of course, the loan book is tilted in favor of the public sector. So obviously, over the medium term, we will want to correct it.

[Operator]

Next question is from the line of Amey Chheda, who is an individual investor.

[Amey Chheda, analyst]

By the way, I'm speaking from Banyan Capital. Just a couple of questions. Firstly on NSL, we have provided 100% of INR 125 crores exposure that we have. So what is the kind of realization that we expect from the NCLT proceedings?

[Sh. Balaji, executive]

Greater than or equal to INR 125 crores.

[Amey Chheda, analyst]

Okay. And when you resolve all these issues, ILFS and Vento and Danu, so they have already provided at around 60%, 65%, right? So wouldn't there be any book value reduction because of this? Or do you expect accretion by running down these accounts?

[Sh. Balaji, executive]

We don't expect any book value reduction. The accretion, we are not able to quantify at this point of time. Let the event happen, then we will share it with you.

[Amey Chheda, analyst]

Okay. And this -- when you get the amount back, just from an accounting perspective, it will be reflected in other income or credit cost?

[Sh. Balaji, executive]

I'll ask Abhinav to answer that.

[Abhinav Goyal, executive]

Yes. So it will be -- suppose if there is an appreciation, it would be -- it will not be a credit cost definitely. As MD sir has said that -- there will not be any downward in the book value. So it's not a credit cost, right? That is one. Second, now, as regard to -- in terms of appreciation, although we are not able to quantify, but it may get reflected in other income.

[Amey Chheda, analyst]

Okay. So basically, in NSL, sir, you have provided INR 125 crores, right? So you already returned that off in your books. Now if you get it, you will recognize that INR 125 crores in other income. Is that correct?

[Sh. Balaji, executive]

Yes. Amit, if you just -- I will -- if you go through the annual report or the financial results of IFCL, right, see if we -- there's a line item called provisions and write-offs in the financial results. So currently, in an expense, it's a positive item. Therefore, it's reduced from your pre-provision profit. How -- it will be a negative entry; therefore, to that extent, our profit should be stated other than the profit thing. Yes.

[Operator]

[Operator Instructions] There are no further questions. I would now like to hand the conference over to Mr. R. Balaji for closing comments.

[Sh. Balaji, executive]

So thank you all for your participation. We hope we have been able to answer your queries to your satisfaction. Anything, you can get in touch with Priya. She heads our investor relations. So feel free to get in touch either with her or with Abhinav. Thank you, and good day.

[Operator]

On behalf of PTC India Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.