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Analyst Meet / AGM - Analyst Meet

Expects loan growth at 15-20% for FY2018

Rural Electrification Corporation

31-May-2017, 12:26
Rural Electrification Corporation conducted an analyst meet on 30 May 2017 to discuss the financial performance for the quarter ended March 2017. PV Ramesh, CMD of the company addressed the call:

Highlights:

The loan book of the company was flat at Rs 201929 crore at end March 2017. The loan growth of the company was mainly impacted due to prepayment of loans amounting to Rs 42700 crore from power distribution companies (Discoms). The discoms have also repaid loans of Rs 11000 crore under normal repayment, as they focus on tapping the bond market.
The company has posted healthy improvement in sanctions and disbursements, which have compensated for prepayment of discom loans. The disbursements have increased 72% to Rs 20572 crore in Q4FY2017 and 26% to Rs 58039 crore in FY2017. The sanctions also jumped 67% to Rs 27094 crore in Q4FY2017 and 28% to Rs 83871 crore in FY2017.
Excluding the Uday scheme prepayments, the loan growth of the company stood at 20% for FY2017. As per the company, there are no further prepayments of discom loan under Uday scheme scheduled for FY2018. The normal repayment scheduled for FY2018 stand at Rs 28000 crore. The company is targeting loan growth of 15-20% for FY2018, while it's very optimistic about various lending opportunities.
The company is expecting huge lending opportunities in the power sector, particularly for expansion and strengthening of power infrastructure. The funding requirement for generation capacity addition is estimated at Rs 10.33 trillion, and transmission capacity addition including transformation at Rs 2.60 trillion during the period 2017-2022.
The renewable loan book of the company stands at small level of 1% of overall loan book. The company is upbeat about the opportunities in the renewable energy sector, while targets sanctions of Rs 10000-15000 crore and disbursements of Rs 5000-6000 crore in the renewable sector for FY2018.
The company is also nodal is for various central government flag programs, while the company works across the value chain of the power sector.
Top 10 borrowers accounting for 37% of current loans and no single borrower group accounting for more than 7% of total loan book.
The GNPA ratio of the company stood at 2.41% and NNPA ratio at 1.60% at end March 2017.
Two major accounts slipped to NPA category in FY2017 - Ind-Bharat Power Rs 400 crore and Lanco Teesta Rs 237 crore.
The restructured loan book of the company increased to Rs 23496 crore at end March 2017 from Rs 19539 crore end December 2016. The company has been making required provisions for restructured loans.
The state sector restructured loan book consists of 4 projects with the exposure of Rs 10925 crore. These projects are completed, while provisions for these restructured assets stands at Rs 475 crore.
The private sector restructured loan book consists of 8 projects with the exposure of Rs 12571 crore. As per the company, about Rs 3000-4000 crore private restructured loans are likely to be completed soon. Other private sector restructured assets, except Lanco Vidharbha and Lanco Babandh, are also likely to be completed on time.
The company has been recognizing NPA on 180 days overdue basis norms, in line with RBI dispensation for follow 180 days overdue basis NPA recognition norms till March 2017. The company has shifted to 90 days overdue basis NPA recognition norms from 01 April 2017, while do not see any impact on its asset quality from shift of NPA recognition norms.
The company has witnessed decline in loan yields to 11.38%, spreads to 3.25% and margins to 4.54% in FY2017. As per the company, the prepayment of Uday loans have impacted loan yield by 60-70 bps in FY2017, while further impact of 30-40 bps is expected in FY2018. As per the company, it would be comfortable with spreads of 2.75-3.0% and margin of 4%.
As per the company, the company is planning borrowings of Rs 55000 crore for FY2018, while borrowings of Rs 20000-25000 crore are scheduled for repayment in FY2018.