PTC India Financial Services Ltd

NSE:PFS

Earnings Call Transcript 2022-Q4

[Nikunj Seth]

A very good afternoon to one and all. On behalf of S-Ancial Technologies, I welcome all of you all to the fourth quarter and full year FY '22 earnings call for PTC India Financial Services. I will now be passing on the mic to Abhinav Goyal, who's the Vice President, and he'll take it forward from there. Over to you, Abhinav.

[Abhinav Goyal, executive]

Yes. So very good afternoon to all valuable investor and other participants. So on behalf of the company, I welcome you all. So today, we are having an investor call for Q4 financial year 2022, a much awaited call interaction for all of us. It was a challenging time for all of us. PFS team was working very hard all days, working, nonworking holiday customer to perform and to deliver in the interest of all stakeholders with all regulatory compliances. Fortunately, now challenges are behind us, and now we are looking forward for a better future. So today, we are having our MD and CEO, Dr. Pawan Singh in our investor call, along with we are having Mr. Vijay Singh Bisht, Executive Vice President; Mr. Sanjay Rustagi, CFO; Mr. Sitesh Sinha, Head Credit; Mr. Ankur Bansal, Vice President from Business Development Unit; and Mr. Vishal Gupta, he is AVP from financing.

So I request Dr. Pawan Singh, our MD, to kindly take the lead.

[Pawan Singh, executive]

Thank you, Abhinav. And once -- on behalf of PFS, let me give hearty welcome to everyone who has joined the investors call today. And it was a long awaited call. And we have been -- as Abhinav pointed out my team and everyone has worked very hard to see it happen. And though at this time of the year, we should be coming with the Q2 numbers, but -- for the current year, but this financial year had to be -- accounts had to be taken up first. But very shortly -- now this is behind us, so very shortly, we will be able to come with Q1 and Q2 before you.

And in fact, last few months, we had some challenges because of the result not getting finalized because our Board, which had come from PTC was very strongly of the view that unless the forensic audit is complete, they would not be taking up the accounts. So while the forensic auditor was taking his own time, and of course, with a lot of effort from our side, we were able to at least see that he was able to not exactly meet the terms as per the engagement later, but still tried to deliver it in a certain time limit so that we could bring the result to you today.

One way it in retrospect has been not delayed, that has its own impact, but in retrospect it is also good because it has taken care of all the uncertainties regarding the issue of forensic audit and the auditors who had taken much stronger view of the absence of -- at least they have this time tried to find much moderated, of course, not totally without qualification, which we also felt that, that was little unwanted. But however, taking into consideration the precedence and timelines, we went ahead with that. But hopefully, that also will go away in maybe a quarter or 2 as we furnish the results.

But important part was we went through the challenge when we were at the peak of our performance. So if you look at -- I'd just like to take you to the fact that though for the fourth quarter, we did not do any activity because our Board was not constituted. And in the first quarter of the current year, only during the latter period that the Board got constituted and that also with directors from the Holding company, not our own directors. But despite that, we were able to sanction in 9 months loan of about INR 4,150 crores and do disbursement of INR 3,888 crores against a sanction of INR 4,098 crores in the previous year -- for the whole year and INR 3,888 crores disbursement against INR 2,647 for the whole year in the preceding year.

So we were at the peak of our performance, notwithstanding the fact that the fourth quarter is the most performing quarter of the year. The largest disbursement transactions happened so far, but nevertheless, that whatever the momentum we have gained because of the direction in which we are moving. I think from now onwards, we'll be able to maintain that same momentum.

Of course, I'll request Sanjay to later on give you a backdrop of the financial results. But at the face of it, we have been able to give for the entire year, a PAT of close to INR 130 crores and profit before tax of INR [ 133 ] crores against INR 93 crores and INR 25 crores last year. So there is a big improvement, considerable improvement.

And what is also important, some of the qualitative aspects, which I would like to emphasize here is that since we are coming at a time when Q1, Q2, so -- of course, CFO will further elaborate on that. But probably, when we are taking numbers as of now, probably the provisioning for 3 quarters have almost been taken care. So that is the importance of this result because it is coming at a time when the first 2 quarters season would have also been there. So this result has not only absorbed the numbers of previous quarter, but it has also in ways because we -- all these factors are taken on the balance sheet date. And the first 2 quarters are also whatever discount had to happen has been also appropriately covered.

So coming back to our business, just 2, 3 lines and of course, my team will give you the specific details. But one thing is very clear because we are committed to become a green sustainable infrastructure finance company. And I'm speaking from COP27, which I came to attend here at -- in Sharm El-Sheikh. And let me tell you the global flavor because last few days, which I -- because the entire -- all the international organizations are here, most of the important head of states are here, most of the important environment finance ministers are here. So it is going to give kind of direction which way the world is going to move.

And I'm so glad to note that what we had envisaged about, say, 4 years back or 3 years back to become a green infrastructure company, and that is this flavor of the day. I mean, that is the emphasis. We all know the global temperature is rising, and despite the commitments made in the Paris conference that we will do by 1.5% the global temperature on the year baseline of 2005. But -- and then, of course, it was said that it will be, but it looks like that even 2.1% would be difficult to achieve. So all the world leaders, both in corporate sectors, the country leaders all have committed that now onwards, the -- all the countries will work together with a common focus that the net 0 target everybody will be working.

And many, of course, there are challenges for emerging economies, but the developed countries have committed to meet -- many of them have committed to meet net 0 target by 2030. India is committed to meet it by 2017. But many of the developed countries have committed now that they will probably prepone the date and try to achieve this before the 2030. So globally, there were city mayors from various cities across the world. All of them are talking about. The only one single challenge, which is the -- how to take care of the green sustainability issues. In India, we have 160,000 megawatt of renewable energy, which includes hydro also.

And by 2030, we want to become 500 gigawatts. So almost closer to 2.5x of what the current capacity is, which throws a lot of opportunity for us for financing in the sector and in mobility space is another space, which is moving very, very fast, very rapid pace because the global evolution, the heating is on account of primarily they feel that it's on account of -- the one is natural, of course, degradation, which is happening, but primarily -- on the contribution side, it is primarily because of the power generation, industrial use and transportation. So these 3 areas are totally under focus and where huge opportunities are likely to come.

And not only on the liability side also, we would hope to benefit because a lot of international funds would commit money to channelizing into this agency -- this area. And PFS can play a very important role as working as a financial intermediary. Many of the international organizations who would like to fund the growing opportunities in the renewable sector, especially in India, where the target is very high and especially that we have been able to build up bankable models under renewable energy.

And of course, another focus area, which is within the renewable energy another focus area, which is going to become very important because we have to have not only clean power, but we have to have reliable power. So the battery storage is another area which is going to come already government of India 10,000 megawatts first capacity bid has been invited, that is going to be accelerated. Also, the area of immobility, as I said, that is also related to battery capacity. So that also will be there.

So these are some of the things which the global economy is poised to move in that direction. And we are very well placed. I mean, we have already positioned ourselves to take advantage of the global economic transition as they are using the word. This is energy transition of global economic transition. So from a dark economy or a black economy, we are moving to now a cleaner or greener economy.

And as an institution, we are very well placed. Another thing I wanted to share, which we will try to -- just 1 second. Yes. So this we will also try to achieve is [Audio Gap] so I said that we are very well positioned, but poised to be part of that transition, global economic transition or global energy transition.

And from our side, we'll also try to look into areas and support projects in this space and including the support of a circular economy, which we are also talking about. On the CSR side, of course, we have our set power because one of the reasons today I'm here because of the work which we did in the CR side and along with the CII Foundation, where the United Nations has given the work which we did in [indiscernible] Punjab and Haryana, to bring down the air pollution in the Northern area of country. That was one of the projects which have been selected by United Nations. And this is also one of the reasons why I was here.

So I with this -- I'll request Sanjay to take you through numbers. And then, of course, Mr. Bisht, will give a oversight on the monetary area, who is now Executive Director and Mr. Sitesh Sinha will give you our little bit of blips on the credit side. And on the business side, there is Ankur who would tell how are we -- what is the pipeline which we have or what we call order book. So over to you, Sanjay.

[Sanjay Rustagi, executive]

Good evening to all. Sir, with your permission, we just want to run through the presentation. The corporate presentation.

[Pawan Singh, executive]

Please, please go ahead and do it.

[Sanjay Rustagi, executive]

Yeah, Abhinav...

[Abhinav Goyal, executive]

Yes. So on this presentation, some of the aspects we updated as of today, a few of the aspects are being presenting as of 31st March. So we try to give it more updated, so as to give a fair idea to all stakeholders. So we are PFS, we are a clean -- sustainable green infrastructure finance company. So we believe not only in providing an economic benefit to the country, we also believe to preserve the environment so as to protect our generations to come.

So this is our presentation at a glance. So this is how we are diversifying our sanctions, our capital adequacy, our debt equity, our net interest margin, our disbursement and our rating, which is a very crucial factor for any rating agency. So as of now, though, we had been put it on watch by CRISIL and ICRA, but yet, we are representing them. So as this past category maybe restored to stable, which it was before arising of the issue on 19th January 2022.

Moving to next, Sanjay, sir, your part.

[Sanjay Rustagi, executive]

So it is giving a quarterly snapshot. On the profit before tax, which was the same quarter last year was INR [ 30.54 ] crores, the loss and which we converted into the profit of INR 33.52 crores. The profit after tax, which was around INR 53.66 crores, loss was there in last quarter of the previous financial year, whereas this -- last quarter of this financial year, we incurred a profit of INR 24.98 crores. The sanction is INR 2,329 crores, the previous FY '21 last quarter. We are at Q4 '22, it is INR 1,331, and we made it plus -- sanction is 0, and the disbursement is 380 outcomes.

The return on assets has improved to 1.03% against 1.86%. The interest spread is almost same. It is 2.92% against 2.98%.. So it is -- we are a listed on [indiscernible]. We are supported by professions of around and a team of consultant -- in 2006, having a market capitalization of INR 912 crores, we are a profit-making company. And our reason is to become a most deferred financial partner in sustainable infrastructure value chain.

So this is our journey so far, as we mentioned that we started in 2006 and in 2021 we enter into -- foray of electric vehicle segment where we have funded 350 buses in Lucknow, in one of the, I should say, esteemed project of the country. So we extend our support to finance to environment value projects, which contribute to sustainable greener stronger. These are our product services. So we do debt financing just like an NBFC. We also do fee-based services. We do provide consultancy to a lot of corporates, and we do advisory services also.

So these are the key functions of the company, starting from interest at maintenance to corporate strategy, we are having a separate, separate department for each of the functions where we are having a dedicated, committed experienced team of professionals. This is our business model. So focusing on a few of the robust area where we are working. And how we are a unique investment case. So this is on 5 parameters -- so we focus on sustainable infra. We focus on high operating leverage and better margins -- we believe in reduction of our stress and PA, which can be visualized our performance over a period of last few years, and we are more back by motivated and experienced management who are having a expert in leading business towards the business -- vision of the organization.

So we are navigating to our next strategy, we are leveraging existing relationships with domestic and global agencies, so as to increase value to all our stakeholders and to increase the brand value of the organization. It is our risk management system. We are having very robust risk management system. So on an average, if we are getting a project or after getting could be through various stages in the organization, only 1 or 2 project gets through our system, so that can be visualized by the fact that in last couple of years, whatever, we sanctioned, none of the account has started. It is our management outlook where we are focused on it a stance of progressive growth and stability through the announcement of our products and quality of our portfolio.

I request our Functional Head Credit to take lead on this slide.

[Sitesh Sinha, executive]

As Sanjay has explained, we are marching towards the sustainable infra projects. So this is a good snapshot out. Over the last 5 years, we have moved towards the -- from power generation, funding NBFC to the sustainable infra financing. Under that, we have in -- for renewable energy asset, we have sanctioned to 14,500 megawatts, which is cross sanction of INR 30,000 crores. and then recent e-mobility concept has come from the last 1.5 years. In that, we have sanctioned 350 buses, INR 334 crore is a sanctioned amount. And another rail and road other infra that we have sanctioned close to INR 3,798 which is -- apart from renewal, this is the biggest portfolio in our biggest assets in our portfolio.

And toward the subsidiary, we have done a couple of water treatment projects, in India under the Namami Gange scheme that is a sovereign company or the government of India is related -- so that we have sanctioned a couple of projects with gross sanction of INR 503 crores. And the transmission as this is -- this is the really amenity basis scheme where the risk of default is minimum.

Under that we have grossly sanctioned INR 3,357 crores which we'll have assisted to develop more than INR 4,400 crores of kilometers in India.

In power port, we have sanctioned not very much project, but it is couple of projects we have sanctioned in last 5 years, this amount of INR 700-odd crore with 43 million tonnes per annum is the good capacity we have sanctioned. So by this renewal assets funding, we have been able to abandon the over 25 million tonnes of carbon dioxide per annum.

Next slide. So these are the -- our key lenders with whom we have developed a relationship over a period of time, and we are quite hopeful that kind of support we were used to get from these lenders and from new lenders, we will continue to get that kind of support. So these are the marquee our customer and to whom we are funded. If you can see, these are the top 10 companies of India who are working in the different infrastructure segment like renewal, road or port or transmission or any other upcoming new sustainability projects that is like green sale, radiance and portside we have 100 JSW. So these are the marquee customers, say, in India, we have supported that indicates what is our quality of our credit portfolio.

And we continue to add new customers like the name being mentioned here. For financial aspect, I'll request our CFO.

[Sanjay Rustagi, executive]

So with respect to the liquidity, which was given on this slide, the companies have been the ample liquidity to meet its both the debt obligation as well as the business needs. As of today, we have around INR 1,245 crores of the high-quality liquid assets as against the RBI requirement of INR 245. So RBI recently come up with a circular where NBFC has to maintain a liquidity close to next 30 days, whereas as per the available information, we are maintaining much above that, which will be required to meet the business needs as well that will be used for the disbursement.

With respect to the loan sanction, if we -- as Dr. Pawan Singh told earlier, we have overlapped the FY '21 numbers with respect to these sanctions that were around INR 4,098 crores, and this year, we've done INR 4,150. And considering in Q4 '22, we are unable to sanction any new loan because of the non-constitution of the board. But in fact, the loan disbursement has increased close to 50-odd percent from INR [indiscernible] crores to INR 3,888 crores. The loan book has come down a little bit from INR 11,000-odd crores to INR 8,700 crores. And the capital adequacy has improved significantly by it has increased to INR 26.17 crores against the INR 24.10 crores. So if we talk about the net interest income, it's almost the same as compared to the previous financial year. It is up to INR 344-odd crores against INR 353 crores. There is a marginal decrease because we are unable to sanction new loans in the Q4.

The yield on the earning note has increased by around 5%, whereas my cost of borrowing has been reduced by 10%. It shows the operational efficiency, which we have created during the last year. And it resulted in the increase in the interest spread by around 12% from 2.71% to 3%. The net interest margin increased from 3.47% to 4.9%, close to 20-odd percent. The earnings per share has also increased [ 4 ] to 2.02% from 0.042%. Cost to income is -- remained stable at around 12%. And the debt-to-equity ratio, which has improved to 3.14% from 4.27%. And the return on networth has also improved significantly around 400% from 1.22% to 5.93%. And return on assets also from 0.22% to 1.22%.

This is the snapshot of the profit and loss account for the year ended. So this financial year, we have -- the profit has been increased to INR 130-odd crores against INR [ 25 ] crores, giving a return of around 407%. And the total income has reduced marginally from INR 1,139 crores to INR 968 crores. The total expenses has increased at a more percentage than the decrease in the income. It has reduced to INR 794-odd crores against INR 146.03 crores.

This is the little bit snapshot around the performance. The sector-wise outstanding, the total loan book has been divided into few categories like renewable transmission, sustainable roads, state power, utility, thermal and hydro. The total loan book as of 31st March, 2022 is INR 8,650-odd crores. And the renewable sector comprises of INR 2,911 crores. And the transmission sector contributes INR 656-odd crores. The sustainable infra INR 214 crores. The road is INR 1,286 crores. The street power utility, INR 25.16 crores, and the thermal and hydro INR 876-odd crores and other INR 191, and other includes the port, manufacturing, mining, sustainable infra, water treatment and key mobilities.

With respect to the -- under these corporate leaders and under the respective head, there is steep application between the corporate lead against these respective sectors like renewable may INR [ 641 ] crores is towards the corporate loan, discrete power utility, the entire amount is a corporate loan. The thermal and hydro INR 143-odd crores and the other is still the same.

[Pawan Singh, executive]

I would like to add a couple of points there in this sector portfolio. If you see although bottom line total number has been reduced, but if you go by our vision and mission, our renewal portfolio, if you see the business model we have adopted for the last couple of years, it is to funding the -- which is given very higher yield in the renewable sector as compared to the providing the long-term sanction. So if you see in the corporate loan, earlier, we have only funded last year book was -- '21 book was INR 275 crores. This year, it has been increased to INR 621 crores in the renewal asset.

Second thing towards the sustainability, we have also focused on the niche area and which is environment sustainably that is the e-mobility and water infra. Last year, our book was only INR 30 crores. This year, in '22, it has become close to INR 245 crores. And third then, lastly, we have also -- we have keep on telling on investor call, we are reducing our carbon footprint. If you see the thermal, sector exposure in thermal, it was last year '21, it was INR 1,357 crores. Now, it has been reduced -- 50% has been reduced. And now as of 31 March, it is INR 875 crores. So these 3 significant points I'd like to mention here.

[Abhinav Goyal, executive]

So on Thermal segment, just to mention that our vision is to become a carbon emission company. I mean the projects which we are funding. So probably in coming years, we would be having 0 exposure on thermal sector. So Sitesh again portfolio-wise shift year-to-year.

[Sitesh Sinha, executive]

Percentage, if you see the maximum percentage, the renewal portfolio, it has been reduced from 44% to 33%. And what we have increased in view of that we have increased in other areas and sustainable infra, which was earlier there was hardly any presence is the resin 2-digit figure. Now we have close to 20% figure. So this is what was the shift for renewal energy assets to other areas of the infrastructure business. And most of the corporate loan is a structure loan we are calling is a state by equity. That position remains same, if you talk about the numbers to number. In FY '21, it was INR 2,451 crores. Again, in this year, it still remains INR 2,515 crores, there is marginally any change. But percentage has been changed because of overall reduction in our book from INR 10,751 to INR 8,650 crores, that's why number looks like our state project close to 30%. Earlier it was close to 22%. So because of denominator has been decreased, that's why percentage had increased, but absolute gross disbursement or book has remained same in the state.

[Abhinav Goyal, executive]

So these are our performance indicators. Our cost of funds are spread, our names all are correlated to each other. So as mentioned by CFO earlier that the pace with which our borrowing cost has been reduced, was much higher in comparison to having impact on our yield. So the net result would be reflected in our stand, which is 4.3% and in NIM, which is 2.92%. So overall, there is an increase in our performance.

So these are the Stage 3 accounts, which are problematic area for any organization, any NBFC or a financial institution. So we are a transparent company. We are giving full detail. Whatever the exposure we are having gross exposure, whatever the provision on the respective loan account we are having the net exposure, which has been reflected here. Then again, we are having some impairment results. I mean over and above what has been stipulated by the regulatory requirement. We have created a reserve on some of the loan account, which has been reflected here.

And subsequent to 31st March 2022, we were having a recovery of INR 147.8 crores around from 2 of the loan account. One is NRSS XXXVI and another one is Athena Chhattisgarh. So NRSS XXXVI is no longer -- it's a third last month. So it's no longer in our book. It has been resolved. And Athena only slight exposure is there, probably which may also be resolved.

It is in lakhs actually. So very insignificant exposure we are having. And another project, Danu Wind, we have started receiving payment from the borrower. So we are quite hopeful that in the time to come, it would become a good account for us. So it is our -- standing a snapshot as we can realize that our stage 3 has been reduced, then again our NPA has been reduced. Then again, our net NPA has been increased slightly. But in actual terms, we were visualizing that there should be a substantial amount of business in Q4 financial year '22, which has not happened because of un-precedence circumstances. We are quite committed that whatever the deficiency has been created in between periods, we are committed to reachieve that. We are committed to deliver on that aspect. We have not revised our goal. Our team is working hard to achieve whatever we visualize at that point of time.

[Sanjay Rustagi, executive]

And in fact, Abhinav, since we have received around INR 147-odd crores post March. As on 31st March 22, the outstanding was INR 387 crores. And one -- if we add the deduct INR 147 crores, which we have recovered, the amount outstanding will be INR 240-odd crores, which will be lesser than the December number.

[Abhinav Goyal, executive]

So other than the business -- other than the indirect contribution, which we are making to the environment, we are doing some social responsibility also. So for Delhi, the big issue was smoke so because of funding of [indiscernible] Punjab and the other neighboring states. So we have contributed significantly on those aspects. We are having a e-mobile health for the weaker section of the society. A lot of projects we have undertaken for the benefit of the society.

This is our standing as on 31st October 2022. So this is all in short about us. Over to you, MD sir, for any contribution on our delivery.

[Pawan Singh, executive]

Yes. So thank you very much for the presentation, which you made. So as you mentioned, I'll just recapitulate my team had said because we have done better on most of the operating parameters, including PAT, gross profit, ROA, the improvement in capital adequacy, debt-to-equity ratio and in absolute number terms even in the stress asset. So all parameters, we have been able to spread NIM everywhere we have been able to do.

Two things I wanted to highlight here, one is that we have, over a period of time, developed a very strong underwriting capability. Of course, we could not get the full benefit of it in the last quarter of the -- the last year of the, first quarter of this year, where Board was almost nonoperational. Now not only the Board became operational. Now we have most recently said that the PFS has got its own independent Board also.

So second thing which I wanted to highlight here is that we have a very robust pipeline. Just I will quickly ask Ankur because I don't want to deny you of questions because for a long time you have not interacted. But quickly, the pipeline, the business which we have at home like, Ankur just very shortly, if you just...

[Ankur Bansal, executive]

Sir, currently, sir, as far as business is concern we have a pipeline of upwards of INR 4,500 crores. And this pipeline is clearly diversified in nature. This is spread over sectors like roads, ports, airports, logistics, EV sector, water, waste management, shipping, waste energy and power transmission, sir.

And broadly on the breakup of the pipeline, the renewables would constitute around INR 1,500 crores, mobility is around INR 1,000 crores, ports is around INR 700 crores, power transmission is around INR 200 crores, shipping and roads include -- shipping and roads would be around INR 1,500 crores, and the waste management is around INR 350 crores. So this is an overall pipeline of more than INR 4,500 crores.

And then secondly, like MD sir has told that PFS has been focusing on sustainable infrastructure. So we see a lot of upcoming companies in sectors like EV, water and waste management. And PFS have always believed in supporting upcoming companies to give them gross capital. So with the same strategy, we have been supporting -- even apart from established companies, we have been supporting upcoming companies. And that -- which helps them to keep scale over time. Earlier, I would like to highlight that our PFS has been very nimble in its approach and have always believed to have a first move advantage like Sitesh has told some time back that we had -- we have funded -- we were the first movers in the EV sector, whereby we have funded around 300 buses in UP -- electric buses in UP, and we had sanctioned around INR 350 crores to green-sell mobility. So this shows our commitment not only to sustainable infrastructure, but will be first mover, having a first move advantage and supporting companies in there growth cycle.

Then fourthly, I would like to highlight that apart from diversification in book, we are also very fairly diversified in our products, apart from the regular project financing, we have been supporting infrastructure companies with products like working capital, big loans, short-term loans and then revolving construction finance, which has been utilized for [indiscernible] at SPV level. So this -- so basically, PFS is able to offer a various gamut of services to these infrastructure companies. who basically approach us for all their funding requirements. And in turn, this helps PFS to increase the yield on the books also because these innovative financing structures give us a better yield than credit financing.

Secondly, it helps to turn our books very fast. And thirdly, it helps to earn a lot of fees on these kind of structures. Then I would like to highlight that going forward, -- our focus is to basically grow our book size significantly in the balance year left. And we'll be focusing on core infra, which are roads and ports, et cetera. And we'll also focus on sustainable infrastructure. like EV water waste management, and we have a robust pipeline towards that end. And we are, I think, well equipped to underwrite all these kind of loans going forward. So that is a brief from business, sir.

[Pawan Singh, executive]

Thank you, Ankur. So I think, now we can have Q&A for that.

[Nikunj Seth]

Okay. We'll now open the floor to Q&A. [Operator Instructions] In the meanwhile, Abhinav there is a couple of questions in the chat, if you would like to begin from there?

[Abhinav Goyal, executive]

Yes. So MD sir I'm just reading it. So there is a question from Mr. Sidharth Shaw that when do we plan to announce the result for 2 quarters of the current financial year?

[Pawan Singh, executive]

Let's CFO address that question and the only thing is from the management side, we have given our target of doing it as quickly as possible. So it should be days. Now I leave it to Sanjay to decide the number of days.

[Sanjay Rustagi, executive]

Sir, we are trying our best to as quickly as possible since the present auditor has given his notice for intent to resign and we need to appoint a new auditor -- once the new auditor appoint, but we are trying to get this done in a quick time, maybe in the 2 weeks time.

[Abhinav Goyal, executive]

So we are trying to get it done in 2 weeks, so our team is working hard, most probably 2 weeks.

Another question is, sir, what are the chances of the company being suspended for training. If I have understood the NSC circular clearly, you have to declare the result of the first 2 quarter by 7th of December. I guess, it's already been replied. So once we are planning to get the auditor in 2 weeks, then probably there is a very slight probability of getting this immediate.

Third one, sir, I remember you mentioning in one of the previous conference call regarding compensating the investor with healthy dividend. Why have not we declared any dividend for the previous year?

[Pawan Singh, executive]

Yes. So this year, we couldn't declare dividend because certain appropriations went into our reserves. And through RBI formula, dividend was not coming. But in the current year, because I've already said that I can't tell the numbers in advance, but I've already told when we decide the balance sheet in the last quarter, and we are deciding it today the provisioning numbers to a very great extent have already been observed. And so we should look for a good result. And surely, we would like to compensate for that this year also.

[Abhinav Goyal, executive]

And the last question, sir, in the chat box is for guidance for financial year '22, '23.

[Pawan Singh, executive]

Yes. So -- as I have already said, a couple of points because one is that my business head has very clearly said that we have a very decent right pipeline of over INR 5,500 crores. And many of these pipelines are at various stages of underwriting, and many of them are low hanging. And our effort is to take up projects where we can -- which have faster deployment of resources. And that is one of the reasons apart from the carbon footprint. Another reason why we have avoided doing thermal and large hydro projects, which also was one of the cause of distress in our balance sheet is we want to avoid projects, we have a longer gestation period. And we want to do -- average gestation period, we want to cut down less than a year for most of the projects. So that is what we are endeavoring to achieve.

So deployment of funds -- so we hope to do the -- we hope to beat the sanction target of last year, what we did. And also meet the disbursement target closer to what last year we did. So based on that, what NIM and spread if you are seeing, we are maintaining a good NIM and spread. We are meeting spread close to almost 3% now and NIM of close to 4.9%. There's a very good capital adequacy, debt equity is also very good, and liquidity challenge is also not there for us.

So we hope to -- with this kind of spread and the kind of sanctions and disbursement we will do, we should be able to incrementally accordingly add to our balance sheet. I cannot exactly give you what clear end number will come, but it is anybody's guess and you can make a back-up page calculation based on the 4, 5 parameters I have said, it would be very easy to calculate. And as I said that the provision numbers already we have taken historically whatever provisioning had to be done, we have done and most of our assets which are there, stress asset very limited, which is there are on a stage of resolution.

[Abhinav Goyal, executive]

[indiscernible] we are having one question from Mr. Karthik. So instead of I get it and read it, I may request Mr. Karthik to please raise the hand, so as he may ask the question directly?

[Nikunj Seth]

Mr. Karthik, kindly, please raise your hand. We'll allow you to voice out your question. In the meanwhile, sir, there is a question from Mr. Dinesh K. Dinesh, please go ahead.

[Unknown Attendee]

Sorry, I was on mute. Hope my voice is audible. This is a follow-on question regarding the auditor. I think you said that after finalizing auditor, you will take 2 weeks to decline result or the auditor has already been finalized?

[Sanjay Rustagi, executive]

The auditor because the existing auditor has to resign and then we can appoint the auditor. The selection of auditor has already been taken place by the Board, but his appointment is spending. So the 15 days from his point appointment, little time to understand the business and financials. The financials from our side is almost ready. So it is dependent upon him how quickly he can give his report on those numbers.

[Pawan Singh, executive]

His selection is already there, and he should -- and CFO already has given you a target date. So that should be what we should look at.

[Unknown Attendee]

This is from Karthik. Thanks that you already released your all the -- like the results soon, already released this last year financial. So I have a couple of questions. So is tax sale from the promoter still on the card like we had some announcement around 2020 around this. And then because of the valuation, they were having some concerns. So is it still on the card or it will be -- there is no plan.

[Pawan Singh, executive]

Already promoter has written that the matter has been started. So till they take it up again, it's not on cards immediately.

[Unknown Attendee]

Okay. So -- and what is the plan to reduce the net NPA because still we are seeing that growing further?

[Pawan Singh, executive]

No. See, net NPA has not gone up. I think Sanjay will explain that. An absolute number, it has not gone up. So there was one asset which we were already giving in Stage 3, which, of course, that is a thin line because till today also because earlier, we were not giving us NPA because of the court order. But it was definitely in Stage 3. So in fact, provisioning numbers on that have gone up, in the previous quarter, December quarter, we did some incremental provisioning debt. But the status of project is definitely better because this is the ILFS Tamil Nadu, which I'm talking about, where the resolution plan is almost on the anvil.

And also this national asset to the construction company, which has been constituted. So of course, today, we avoid doing a large construction lending, but these are some of the legacy cases. where with this, the public sector banks who are mostly leading in such cases have become very comfortable.

So they're trying to push this through NSCL root and since it's operating plant, how power demand is there today. So we hope to get a reasonably good resolution out of that, either through a resolution plant or through sell-through the national asset reconstruction company, which would happen in a month or 2. But the number has not gone up. I mean, there's no further addition. There's no slippage in these recent months or 1 year, as we know, a slippage of any kind -- expectation [indiscernible], which of course, a negligible amount, but they're also that realizable kind of money.

So the only thing is that what we were -- still we could have avoided showing this ILFS account is not NPA because we have a court order. But as a matter of prudence, we are disclosing it that it has become NPA. But of course, we also have to be careful not to -- or on the wrong side of law because we will be almost making a clarification to this effect. But as far as the law goes, this is not an NPA, but as a matter of abundant prudence, we are showing this as an NPA because see, because this particular asset went -- it's operational, almost INR 2,200 crores lying in the TRA account. But debt servicing is not happening because as you remember, amber green and red. So this felt in the amber category. And as soon as the resolution plan is approved, it will go into green category and the debt servicing will start. So there's no deterioration in the -- neither in the asset quality nor there is additional slippage of NPA.

This one account, which was Stage 3 in any case, it was accountingly getting treated the way it had to be treated. But -- and provisioning also it was getting treated the way it had to be ticked. But only thing is that we have now put it as NPA. So that leads to -- the -- optically, it looks that NPA numbers have gone up.

But Sanjay, would you like to add to that? Sanjay, would you like to add to...

[Sanjay Rustagi, executive]

Yes sir, I would like to add something. So the net NPA number as on 31st March, Q2 is INR 387 crores, and we have already received around INR 147 crores. So that brings down to my net NPA number to INR 240-odd crores against the December number of INR 253 crores. So it is the lowest number amongst the previous 6 quarters, if we can say that. And like you already said, there are 2 accounts under resolution, if i remember correctly, one is the Meenakshi, which is under ARC seal, the asset reconstruction company and..

[Ankur Bansal, executive]

It's Meenakshi and...

[Sanjay Rustagi, executive]

ILFS.

[Ankur Bansal, executive]

ILFS.

[Sanjay Rustagi, executive]

ILFS. I mean, these 2 accounts goes, then the NPA number will come drastically down -- significantly down. And there is no incremental NPA, no new slippages post March 2022.

[Unknown Executive]

That was on 31st March. But it's a small amount of INR 3 crores.

[Sanjay Rustagi, executive]

INR 3 crores. That is in the last quarter and that has already been considered in the...

[Unknown Executive]

Yes. This is included.

[Sanjay Rustagi, executive]

So sir this is from my side.

[Pawan Singh, executive]

I think that should answer the question.

[Nikunj Seth]

Okay. Karthik, your hand is raised. Do you have something further?

[Abhinav Goyal, executive]

I guess you need to allow, he's on mute.

[Ankur Bansal, executive]

Mr. Karthik, you're on mute.

[Unknown Attendee]

Sorry. I was not able to click out. Yes. So follow-up on that collection part. So have you done all the collection from the bad asset or stress asset? Or is there any further which we are like apart from those 2 accounts that you mentioned? So is that further, which we are planning to collect?

[Pawan Singh, executive]

Mr. Bisht, would you like to add to what Sanjay said just now.

[Vijay Bisht, executive]

Yes, sir. As Mr. Sanjay has already mentioned that after 31st March, we have already resolved one account, which is NRSS, where it was -- design was taken prior to 31st March, but we received the amount of resolution on -- in the first week of April. So that is around INR 127 crores. So that is removed. And in another account, which is Athena Chhattisgarh, we got an amount of around INR 19.5 crores where the amount -- the gross loan was remaining -- was around INR 20.44 crores. So that makes it INR 147 crores that we have got. And then apart from that, there are accounts like if you see number wise, which are very small, like there is an account [indiscernible] around INR 2.65 crores. And that also we have received around a small amount of INR 1.2 crores. And this will be now taken care.

And then if you see the larger amount, there is -- this Meenakshi is already in the last stages of NCLT. And here, the banks are also now, the State Bank is the lead. They are also proposing to sell to the [ bad ] bank. That is the NARCL. So we are hoping that we will get some amount there. So in the next, I think 1 or 2 quarters, it will also get resolved. And beyond that, we have got -- NSL is only there, which is 100% provided. No -- there is no further addition -- and there is one more account, which is in the stage 3, which is Danu. Now in this case of Danu, already PFC and REC have started under the late payment surcharge scheme, they have started given directly to the generator. And for the last 3, 4 months, we are receiving equal amounts and it will be resolved under 12 equal monthly installment. So the entire amount would be received. So for the last 4 months, we have a receivable amount, Sanjay, can you tell the amount.

[Sanjay Rustagi, executive]

Sir, it is close to INR 20-odd crores, which we have received from...

[Vijay Bisht, executive]

Yes, close to around INR 20-odd crores we have already received. And the balance, I think, will be around INR 60 crores or some INR 70 crores will be there.

[Sanjay Rustagi, executive]

INR 53 crores.

[Vijay Bisht, executive]

[indiscernible] so that will be received in the next 8 months. So that's all from my side.

[Nikunj Seth]

Okay. Next, we have Shivam Sarswati. Shivam, you can go ahead and ask your question.

[Unknown Attendee]

I hope I am audible.

[Nikunj Seth]

Yes, please go ahead.

[Unknown Attendee]

Okay. So PTC India holds about 65% in your company. And in one of the previous interactions with the management, they spoke of plans for divestment. So could you shed some light on the way forward? And also, is there any further strategic initiatives planned by the business?

[Pawan Singh, executive]

Yes. So as I had mentioned earlier that the communications to stock exchange by PTC last was that the whole thing has been kept aside. So they have not come back on that. So I presume that as on date, the position is same. There's no modification. So they are not looking at this investment now. And so -- and also, it would be best like PTC answer this question because they are the right people to answer it. But as of now, the way it is, that this is [indiscernible] and it is not happening anything currently. It is not likely to happen.

As far as our strategic plan goes, our strategic plan goes because the vision which is basically coming from -- we have a very vision, which has come from global synergy of where economics and sustainability are tight. And we are totally committed to have our contribution -- India's contribution to net 0. We want to be a player, important player in that. So our vision, we want to position ourselves, as India has one of the major organization, which would be contributing significantly to the net 0 and be the part of economic transition from a dark economy or black economy to green economy. So this is our vision. And that is where the huge opportunity is going to come. And what is going to be green is not only going to be sustainable for the environment, but we feel that it is going to be very strongly not only feel, but we believe that it is going to be a very, very sustainable for economics also.

Like in COVID period, all the thermal power plants, there are payment delay problem, which happened. But none of our -- we had no -- we never had to like moratorium and all. Hardly, we had to give any moratorium in our case. There was no stress in any of our payments because renewable energy plants did operate on a must-on principle, and we got paid in time. So never there was a default. In fact, since a lot of liquidity support came from the government, we did much better. than what most of the lenders had done. So that is our vision, and we want to take a very large pipe.

And let me also tell you 2, 3 things. One is, of course, there has been some back burner delay in accounts, some of the issues which came up, which are behind us. But also, like it happens the churning. It has been the churning of the company. Today, we are in a position that we know the direction in which we are moving. So there's a lot of clarity between promoter and us -- and also, there's a lot of clarity in this sense of business direction because there was, of course, a sense of direction earlier also, but there were a couple of ambiguities around that, which have been taken away. And our systems like the current Board also has now given a lot of powers to business committee to take decisions. So having had that kind of a clarity and direction which we have moved and the opportunities which are there.

As I said, we are moving from 140-gigawatt to 500-gigawatt, this 2023 and by '30, we have to move there. So in that space, we are -- many of my colleagues told that we have been the prime movers or we have been the first movers in this direction. So we hope to play a very good role there. And not only we are doing -- there's a little bit of crowding. I do agree in the space of typical project finance, but as my colleague pointed out and put that we have a lot of hybrid finance modules, and our spend comes from hybrid financing.

So we will try to take a very large kind of pie of the cake and at least let me assure you that from now onwards, when I say now onwards means, November onwards, the kind of growth we'll be able to present would be unprecedented. It will be a kind of like -- that was already happening because in the previous year, if you see that we had done INR 4,100 crores. And with the same momentum, we would have almost crossed INR 5,000 crores -- at least INR 6,000 crores, we would have reached because the largest sanction happens in the last quarter. And that is a conservative number, I will give you.

So that momentum from now onwards, we are going to maintain. So we are going to grow in a way which we have never grown in past because of the opportunities -- because of a lot of policy clarity and risk mitigation around credit proposals also because of good capital adequacy and the kind of liquidity and the debt equity ratio, which we have sent a strong team of underwriting capability, which we have.

[Unknown Attendee]

Great, sir. I have one more question for you. So could you tell us a bit more about the partnership with GGGI to set up the renewable energy infra fund? And by when can we see it reflect in our accounts?

[Pawan Singh, executive]

So with green growth fund, we are not -- they're not going to be our partners in that. Basically, they are giving us kind of a -- they are giving us the -- what we call support in setting up the fund. And basically, on their own investment, they have done the business modeling for us, and the counting partners also globally who can be our partners.

So we have had a couple of talks with them because for a debt fund, one of the requirements of RBI is that I need to have at least 2 equity partners. And of course, we have requested RBI for a [indiscernible], but it has not happened so far because the earlier debt funds were provided this kind of record business. So both lending finance as well as IDFC have provided this kind of business. So we have asked for it. But notwithstanding that we are at a very discussion with various basically led by Green Growth fund. They are the ones who are trying to find a business partner for us to take it forward.

So we will work on that and see that this gets matured, hopefully. I can't give a time line on this immediately, but it should happen as early as possible. But then we are also trying to work alongside with them because not limited to setting up debt funds, but also scouting partners as we are a lot of international development agencies, financial development agencies would now be interested in bringing their products in India. And if we can be used as -- since we have that underwriting capability, and we have that flexibility of doing hybrid products. So we can be a kind of intermediary between all these developmental institutions and the project developers.

[Nikunj Seth]

Okay. Next, we have a question from Mr. Jai Inder Kumar.

[Unknown Attendee]

Yes, thanks to the team for producing the Q4 results 2022. Good set of numbers. And I have a couple of questions. One is relating to the like -- can we expect any monthly business updates from the company?

And the second question is on like many times since 3 years, I'm observing this company, I'm a shareholder of this company since 5 years. I'm observing since 3 years -- many times the meetings will get scheduled and it is getting canceled and it is going on. It's every -- it's never ending. And this is creating a lot of small investors like me losing the patients, and we are losing the confidence on the company. I don't want this to happen in the coming future meetings. And the net interest margin is very low. That is what I believe. And what are the interest -- what are the profit we are making. It is going towards the provision itself. And it's not reverting anyway to the investors. Can we elaborate -- can you explain more about how we can see the company in upcoming quarters?

[Pawan Singh, executive]

I would not -- I will like to answer this question, and I'm glad that you raised this issue, so there's -- it can be addressed. First of all, I do agree with you, but there have been a couple of times in past, not more than one solitary occasion where we had to announce our results and go ahead and do it. That was -- let me be very clear and transparent about it because we have been trying to do results as quickly as possible for the reasons best note to everyone here, what were those reasons. And there was nothing like linking this with the forensic audit which -- linking with this forensic audit which there's one view in the board that should be linked to the forensic audit, so that is the reason why -- and of course, some time also was taken by the forensic auditor to do it.

So there were couple of times where we did have -- we did try to have results as on a scheduled date, but because of Viewpoint emerging that the forensic audit should be completed before the results, and that is why we were not able to often reach to a final conclusion. So I do agree with you. But then now that we have come with that result, that is a thing of past, which is already over because there was always this -- this was the bottleneck and that bottleneck has been closed, so this will not happen.

Regarding the NIM, NIM has, I think, improved quite a bit. And for the infrastructure company, it has gone up from -- last quarter, it was [ 4.02 ] it has gone up to [ 4.30 ]. And for the year also, it has gone up from [ 4.19 ] to [ 4.30 ]. So NIMs have been improving. That's quite a -- if you look, last 3 years, NIM and spread is one area which we have very hard and we have tried to improve the operational margins. Yes, there have been provisioning issues because I said there were legacy issues and -- because of that, we had to do the provisioning and we've made some provisioning. And because of that, the profit numbers did not really 100% reflect the operational efficiency. And as my colleague CFO has just mentioned that now the numbers have -- that net numbers have almost come down below INR 300 crores, and for which also we have a resolution plan.

So most of it, the provisioning thing has been addressed and the operational efficiency, which we have on our system and with the increased incremental loan book, probably you will find the -- in fact, somebody had asked here question that when will you reach return on capital employed double digit. And let me assure you, if you look at the operating numbers, we are already above the return on capital employed minus the provisioning numbers we should do. But having done the -- most of the provisioning which has had to happen and whatever letter is left out, we have resolution plans which we have to take place in a quarter or 2 and now that we have a full fledged board in place, the things should move faster. So we should be able to give you a double digit, I think as you know, on the return on capital, ROC, return on capital employed very quickly, maybe in a quarter or 2.

[Nikunj Seth]

Okay. Great. Thank you so much, sir. In view of time, this was the last question. I will be passing on the mic to Dr. Pawan Singh for the closing remarks. Over to you, sir.

[Pawan Singh, executive]

So thank you for all of you coming here and interacting with us. And already, I have given you kind of a road map as to how we will be moving. We will be moving broadly on the sustainability model, net 0 India's commitment to NTC, internationally determined contribution will be. [indiscernible] as a good infrastructure finance company and where we have opportunities. And as I said, that now many of these things have been streamlined and decentralized and which should help us to take things forward in the right direction and the -- both in terms of growth and both in terms of operational efficiency. We should be able to come back to you. And somebody gave probably a suggestion. We would look at it a very valuable suggestion that can we give a monthly blueprint subject to whatever regulatory, whatever may be regulatory issues here. But we'll definitely from our side would like to do that, I request my investment team to take care of it.

And very soon, we'll also have a Director of Finance. We have already priced for the post, and we will be having a Director of Finance in our company. And of course, the issues of the forensic auditor whatever was there. We have been very, very transparent. We have given the replies. Every question has been addressed. Every point has been addressed. We have a very strong understanding of our subject. And RBI does our inspection every year. And we are almost 0 kind of [ adversial ] remarks from RBI or any of the inspection before.

And we have been very, very clear. There have been issues and there have been some kind of risk created around it. But all the questions which have been raised have been adequately addressed in the replies which we have given. And let me assure you, we have a very strong robust financial system. In the past also, we have never had any qualification and probably will not have qualifications in future. So with this remark, let me assure you that you will see PFS as a clean green sustainable infrastructure finance company.

[Nikunj Seth]

Thank you, sir. Dear all, we will be concluding this call due to positivity of time. We will soon be interacting again with the Q1 and Q2 results. Thank you so much, everyone.

[Pawan Singh, executive]

Thank you.

[Abhinav Goyal, executive]

Thank you all. Thanks from team PFS Site.