I am pleased to welcome you all to the 11th Annual General Meeting of PTC India Financial Services Limited (PFS). At the outset, I would like to thank you all for the confidence reposed and the support extended to the Company. It is your confidence and support that enables us to grow and perform year after year.
The Financial Statements for the year ended 31st March 2017 along with the Directors’ Report and Auditors’ Report have already been circulated to you. With your permission, I would like to take them as read.
During the financial year 2016-17, your Company completed 10 years of service to the infrastructure sector of the Country. On reaching this milestone your company has an outstanding loan book of Rs 10,000 Crores. During the year completed, your company has made sanctions of Rs 10,000 Crores
The Indian economy is undergoing a transformational change. The power sector has always been the lifeline of the economy, is one of the prime drivers of economic growth and social development and accordingly, the sector’s development is being given due importance in the national planning and resource allocation process. Private participation in the sector is continuously increasing, thereby indicating confidence and support. Sustained economic growth would drive electricity demand in India. The Government of India’s focus on attaining ‘Power for all’ has given an impetus to investment in the country.
The power sector offers opportunity for investment in generation, distribution, transmission, and equipment. India has set an ambitious plan to add 175 GW of renewable energy generation capacity by 2022 and is being counted globally as a country leading investments in renewable energy. As a result of persistent efforts & policy action, Moody's has upgraded the outlook for India's power sector from Negative to Stable.
The total installed power generation capacity in the country crossed the 325 GW mark as at 31st March 2017. The renewable energy sector saw record capacity additions during FY2017 and the total renewable generation capacity addition aggregated to about 11 GW during FY2017 surpassing the capacity addition in thermal sector. The Renewable Energy capacity is poised to see further additions in line with the Government’s vision of installed capacity of 175GW by 2022.
Your Company focuses on attractive opportunities across the infrastructure sector especially the renewable energy projects. Infrastructure requires huge investment and PFS is focused to meet the challenges and tap the potential opportunities. The Company is focused and constantly eyes opportunities to continue with the growth momentum. At the same time, however, the infrastructure sector is also experiencing stress and several projects (both operating and under construction) are facing challenges. Your Company is also addressing concerns in some of its portfolio projects and is continuously engaged with co-lenders and other stakeholders.
The debt assistance sanctioned to various projects during 2016-17 increased by 58% to Rs.10,297 crore compared to Rs.6,528 crore in 2015-16. The disbursements maintained an upward trend and increased by about 18% to 4,179 Crores during FY2016-17. The pattern of disbursements saw a shift towards non fund based facilities.. The gross portfolio stood at Rs.12,342 crore; fund based portfolio stood at 10,610 Crores and non fund based portfolio stood at 1,732 Crores as at 31st March 2017 The outstanding equity investments by the Company aggregated to another Rs.208 Crore as at the year end. The cumulative aggregate debt assistance sanctioned by the Company as at 31st March 2017 aggregated to Rs.20,510 Crore. The composition of the debt sanctioned by the Company is also witnessing a change with renewable projects comprising about 63% of the aggregate debt sanctioned by the Company as at 31st March 2017. PFS continuously explores attractive opportunities in newer areas for diversification of its portfolio and has assisted power transmission projects, power distribution, energy efficiency, annuity based road projects alongwith railway sidings, and coal mines etc. Such projects constitute about 21% of the total sanction made during FY2016-17.
During the year, your Company availed external commercial borrowing (ECB) aggregating to USD 20 million from OeEB, a Development Bank of Austria. The ECB shall help in reducing the overall cost of funds of PFS. On the domestic front, your Company added banks, financial and other institutions in its borrowings programme through loans and commercial papers issues.
Another significant and important milestone during the year has been the inclusion of your Company as a Financial Institutions covered under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFESAI), 2002 vide a Central Government notification. This would goa long way to take effective measures in dealing with non-performing assets and in recovery & restoration of economic value of the stressed assets.
The power sector is also experiencing stress and several projects (both operationing and under construction) are facing challenges related to fuel price and availability, power tariff, time & cost overruns alongwith limited equity capacity of promoters specially in case of under construction projects. Your company is also facing similar challanges in face of its portfolio projects. As at 31st March 2017, the non-performing loans portfolio stood at Rs.585 Crore and projects having aggregate loan outstanding of Rs.852 Crore are facing delays in commencement of commercial operations and are classified as Standard Restructured Assets. The Company continues to monitor these projects and measures are being pursued for their resolution. Of all the non performing and standard restructured assets’ portfolio, assets with aggregate exposure of Rs.1,180 Crore under consortium financing and suitable measures including restructuring under RBI guidelines are being contemplated for these. The Company regularly monitors the progress and operations of the assisted projects through its comprehensive project monitoring mechanism.
Your Company completed another year of continued progress and growth in operational and financial performance. The interest income for the FY 2016-17 increased by 21% to Rs.1,114 crore as compared to Rs.921 crore during 2015-16. The Company earned an amount of Rs.143 Crore during the year by way of profit on sale of investments as compared to Rs.207 Crore during FY2015-16. The profit from sale of investments accounted for about 11% of the total income as compared to 17% during the previous year. The share of interest income in the total income increased to 82% during FY2016-17 as compared to 78% during FY2015-16.
The operational costs also increased during the year. The finance charges for FY2016-17 increased by about 22% to Rs.645 Crore as compared to Rs.530 Crore during 2015-16. The finance charges for FY2016-17 include amortization of foreign currency translation aggregating to Rs.14 Crore compared to Rs.23 Crore during 2015-16. The overall yield on loan assets for FY2016-17 stood at 12.10%, whereas cost of borrowed funds reduced to 8.79% during FY2016-17 compared to 9.05% in FY2015-16. The return on net worth is about 18.69% during FY2016-17.
The profit before tax (PBT) for FY2016-17 stood at Rs.529 Crore compared to Rs.531 Crore during 2015-16. The profit after tax (PAT) for FY2016-17 stood at Rs.345 Crore.
Given the performance of your Company during the year, the Board of Directors of the Company have recommended a dividend @15% i.e. Rs.1.50 per share for the financial year 2016-17.
The credit rating agencies have also maintained their view about your Company and its robust business strategy with its healthy earnings profile. Crisil has assigned its highest rating “CRISIL A1+” to the Commercial Paper Programme of PFS and ICRA has assigned its highest rating “ICRA A1+” to the short term loans availed from banks. Long term instruments are rated “CRISIL A+/Stable” by Crisil, “ICRA A+(Positive)” by ICRA, “CARE A+” by CARE and “BWR AA (Stable)” by Brickworks.
Your Company is committed to maintain the highest standards of Corporate Governance. A diverse composition of your Company’s Board of Directors, providing timely and accurate information to the Board and its Committees, transparency and fairness in all dealings, appropriate disclosures, compliance with applicable laws and regulations, internal controls, , all aggregate to meet the ultimate objective of maximizing the shareholders’ value. Being an Infrastructure Finance Company, PFS regularly pursues businesses that maximize returns while effectively managing the inherent risks. Decision making and execution is driven by its governance structure, ethics and value systems. Your company encourages its employees to act ethically all the time, every single time. PFS’s philosophy of Corporate Governance embodies the dual goals of protecting the interests of all stakeholders while respecting the duty of the Board and Senior Management to oversee the affairs of the Company and promote long-term growth and profitability.
I would like to sincerely thank you all and express the appreciation of the Company. Let me also express our gratitude to Ministry of Power, Ministry of Finance, Reserve Bank of India, SEBI, NSE, BSE, investors, banks, financial institutions in India and abroad and the esteemed promoters of our assisted projects for their continued support and confidence. I extend my sincere thanks to my colleagues on the Board for their involvement and mature counsel. I would also like to acknowledge the contribution of employees of PFS for their hard work, professionalism and commitment towards the Company. In the coming years, we and the Company would continue to remain committed to meet the expectations of all the stakeholders.
Thank you, Ladies and Gentlemen.