Power Finance Corporation Limited ($PFC)

Thank you. Ladies and gentlemen, on behalf of Power Finance Corporation, we feel honored and privileged to welcome you all to this investors meet. Today, the company announced its financial results for the year 2025-'26. PFC is always aiming to connect with its investor and build a strong and positive relationship with the investment community. With this objective, today's event has been organized to discuss PFC's financial performance with the current and prospective investors. Now I would like to introduce PFC's management on the day. We have to my immediate left, Shri Rajesh Kumar Agarwal, Director, Finance; Shrimati Parminder Chopra, Chairperson and Managing Director; and to my extreme left, Shri V. Packirisamy, Executive Director. The program for today's Annual Investors Meet will start with PFC's CMD speech, which will be followed by a Q&A session. Now I would like to invite Shrimati Parminder Chopra, Chairperson and Managing Director, to address the gathering.

Good evening, everyone, and a warm welcome to all of you, and thank you for joining us today. We truly value the continued trust in PFC. At PFC, our investor communication is built on 3 Ts: timeliness, trust and transparency, and we remain fully committed to it. Today's investor meet is another step in strengthening our engagement with the investor community. Before I begin, I would like to introduce our newly appointed Director of Finance, Mr. Rajesh Agarwal. Mr. Rajesh brings in more than 31 years of experience across the power and the finance sector. He has handled the key areas like treasury banking, taxation, fundraising and corporate accounts. We are happy to have him here at this moment and important stage of PFC's journey. On my left, Mr. V. Packirisamy, Executive Director, Commercial is there. As you know, our Director, Commercial also retired on 31st of March 2026. I think he has been shortlisted, and we are awaiting the formal appointment for him. He also has more than 30 years of experience in the power sector and infrastructure financing. Now coming to the highlights for financial year '26. Financial year '26 has been an important year for PFC. It's a year of strong performance, big milestones and also global uncertainty. But despite all, PFC remains steady, resilient and growth focused. If I have to describe financial year '26 in one line, it was a year where resilience met results. With this, I would like to start with one of the landmark strategic development, which is the restructuring of PFC and REC. As you know that this was announced by Honorable Finance Minister in the Union Budget on 1st of February 2026. And as you all know, PFC already holds 52.63% stake in REC since the acquisition in 2019. We believe this is a defining step which can create long-term value for all stakeholders. As India moves towards the vision of Viksit Bharat 2047, the power sector will be a key growth engine. And a unified institution will help unlock better scale, strong capital efficiency, faster decision-making, deeper sector reach and a larger financing capability. The combined entity will be positioned as a single window financing partner for India's power sector. We have already started the process. Both PFC and REC have already given in principle approval for restructuring in the form of merger of PFC and REC. We have appointed legal advisers, transaction advisers, merchant bankers and registered valuers. On the government holding front, shareholding front for the merged entity, it's intended to maintain its status as a government company. And the detailed structure is currently under discussion. Further, we are also working on the valuation and the draft merger scheme. We are targeting for the merged entity to come into existence by 1st of April 2026. And this shall be subject to regulatory approvals from NCA, RBI, SEBI, cabinet approval, presidential approval, which is required in terms of our Articles of Association. Further from a business integration perspective, there is already large alignment between PFC and REC. Both the companies have a very similar business model and similar regulatory framework across all functions. Over the last few years, we have aligned many of our policies across lending, pricing, accounting and operational processes. So the foundation is already strong. Further, as we progress on this journey, we will continue to update investors on the key milestones. With this, I would like to share some highlights on the consolidated performance for financial year '26. On a consolidated basis, we have the largest NBFC loan book at around INR 11.64 lakh crores. As a group, we continue to maintain the leadership position in the renewable energy financing with one of the largest renewable book of INR 1.65 lakh crores. Our consolidated PAT is the highest among NBFCs at INR 33,625 crores. At the same time, our asset quality continues to remain strong with net NPAs at around 0.13%. With the size, balance sheet strength and sector experience, we believe that PFC and REC restructuring will create a financial institution of significant scale and strategic relevance. Coming on to the PFC's stand-alone performance. I'm happy to share that for financial year '26, we reported our highest ever net profit of INR 20,051 crores with a 16% increase year-on-year basis. This was driven by a healthy net interest income growth of 13%, along with provision reversals of around INR 1,800 crores during the year. With this, PFC continues to remain the highest profit-making NBFC in India. Further, even in a challenging environment on both asset and liability side, PFC maintained business resilience supported by strong capital. As on 31st March 2026, our CRAR is at 23.44% with Tier 1 capital at 21.93%. These levels give us a comfortable headroom for future growth. Our net worth also crossed a major milestone of INR 1 lakh crores with a 13% year-on-year growth. Our strong financial performance has also enabled us to consistently reward our shareholders. The Board has proposed a final dividend of INR 3.95 per share. With this total dividend for financial year '26 stands at INR 18.55 per share. The final dividend shall be paid after the shareholders' approval at the AGM. Now coming on to the key financial indicators. The yield for financial year '26 is at 9.96%, cost of funds at 7.50%, the spread at 2.46% and NIM at 3.55%. All of these are within our expected range. Looking ahead, the trend of these indicators need to be seen in the context of current market environment. Keeping in view the business environment, PFC from time to time has been continuously collaborating its lending rate strategy. In financial year '26 due to lower interest rate cycle in India and increasing competition, we consciously priced our lending at competitive rates to support business growth. As a result, the impact of this will be reflected in our yield numbers in financial year '27. On the cost of fund side, while we did benefit from the lower domestic interest rate, the impact of volatility in ForEx market led to some pressures on the overall funding cost. Going into financial year '27, keeping in view the movement in yield and uncertainty in the ForEx market, we expect our spread to be in the range of 24% to 25%. Now moving on to the asset quality. In line with the guidance we shared earlier, we have successfully resolved Sinnar Thermal Power project of INR 3,001 crores under NCLT route. We have recovered 42% of the principal amount, further provisioning of 80% was provided on this asset. So the resolution resulted in provisioning write-back of nearly INR 670 crores during the quarter. In addition to this, as shared earlier, we have resolved TRN Energy loan of INR 1,139 crores, wherein we saw a provision reversal of around INR 160 crores. With successful resolution of both Sinnar Thermal and TRN Energy during financial year '26, our asset quality has further strengthened. Our net credit impaired asset ratio is at new low at 0.15%. Gross credit impaired asset ratio is at 1.09%. Here, I would like to mention that 80% of our NPA book has been resolved from its peak level. With this our Stage 3 is now at INR 6,323 crores comprising of 19 projects and out of these 19 projects, 10 projects worth INR 5,459 crores having resolved under NCLT, of which 6 projects of INR 2,600 crores are under liquidation. The remaining 9 projects of INR 854 crores are being resolved outside NCLT and which one of the major project is the Shiga Energy loan of INR 522 crores where approval from co-lender. I would like to share that out of these 19 projects, on 16 projects of INR 4,680 crores we have already created 100% provisioning. Also on overall basis, coverage on Stage 3 assets remain healthy at around 86%. Talking about provisioning in financial year '26, we saw provision reversals of around INR 1,800 crores. As mentioned earlier, INR 800 crore reversals were due to resolution of Sinnar Thermal and TRN Energy. The other major provision reversals was around INR 1,000 crores. In January '26, 14th annual integrated rating of power distribution utilities was released. In the report, ratings of 18 DISCOMs have been upgraded, while DISCOMs have seen downgradation. Accordingly, based on the improvement in DISCOM rating, a provision reversal of nearly INR 1,000 crores on PFC's DISCOM book has been done under ECL framework. Now let me turn to the loan asset book. During financial year '26, we disbursed INR 155,414 crores. In renewables, as India is moving towards firm and dispatchable green power, major disbursements were in hybrid solar wind projects. On distribution front, lending was driven by short and medium-term funding requirements. In conventional generation, we capitalized on refinancing opportunities, especially in the government sector. With this, our loan book closed at around INR 5.8 lakh crores, reflecting 7% growth during the year. You know that starting February 2025, RBI started with rate and the repo rate saw an overall reduction of 125 bps, leading India into a lower interest rate cycle. For NBFC like PFC, in a low interest rate cycle, generally, there is a prepayment pressure, which is a well accepted and known risk. In financial year '26, with the strategy of 3 Rs, realistic, resilient and robust loan growth, we had shared our loan growth guidance. However, considering the declining interest rate cycle, competitive pressure from banks, the prepayments were disproportionate to that which was factored in, particularly in the commission segment as banks aggressively refinanced these assets. Without these prepayments, our loan asset growth would have been within our guided range of 10% to 11%. For FY '27, we do not expect any further rate cut from RBI, this is reflected in the fact that RBI has kept repo rate unchanged at 5.25% for the 2nd consecutive meeting and maintained a neutral stance during its first NPC for financial year '27. Therefore, we believe that prepayment pressures should moderate going forward. On the sectoral front, I am proud to share that India ranked third globally in terms of renewable energy installed capacity. The power sector continues to remain one of the strongest growth stories. India's total installed capacity has now crossed 530 gigawatts primarily driven by renewable additions. During financial year '26 alone, India added around 55 gigawatt of nonfossil fuel capacity and this is the highest increase in any year. The electricity demand in India continues to remain strong. Peak power demand touched all-time high of 256 gigawatt in April '26. At the same time, rising electricity demand is creating the need for firm renewable power. For this focus is on adding hybrid renewable projects, renewable energy with storage solutions such as battery and pump storage, et cetera. In financial year '26, nearly 40% of the tender renewable capacity included storage component while another 30% related to hybrid projects. I'm happy to share that PFC has already started sanctioning energy storage solutions. Cumulatively, we have sanctioned around INR 16,000 crores towards battery and pump storage project. This gives us an early mover advantage in financing new and emerging technologies. On the distribution side, DISCOM performance continues to see improvement. AT&C losses have reduced to 15.04%, moving closer to 12% to 15% target under the RDSS scheme. Further, for the first time at an all-India level, DISCOMs have reported positive profit after tax of approximately INR 2,700 crores. From the lending perspective, currently, we largely see opportunities in short to medium-term loan requirements of distribution. In conventional energy space, we see opportunities emerging across thermal and nuclear capacity expansion in alignment with the national scheme. Additionally, lending in the infrastructure sector will also contribute incrementally to our loan asset growth. Overall, our future growth will be driven by a diversified mix of opportunities across the sector. Accordingly, considering the above and keeping in view the incremental lending on our large asset base and the prepayment cycle, we are targeting a loan growth of around 10% in financial year '26. Now moving on to the borrowing side. As of 31st March '26, the total outstanding borrowings stood at INR 4,88,500. The domestic foreign outstanding mix continues to be 80-20, respectively. Further, out of the total borrowing, 55% are fixed rate liabilities. This provides stability to our balance sheet even during volatile market conditions. As on 31st March '26, our outstanding foreign currency borrowing is at U.S. dollar equivalent to INR 10.3 billion. The foreign borrowing portfolio remains well diversified with 51% being U.S. denominated, 23% JPY and 16% euro. If we see, around 97% of our total foreign currency portfolio is hedged against exchange rate. The hedging is being done through various derivative structures with defined protection ranges. FY '26 was one of the most volatile years for global currency markets in the recent. Trade tariff, delay in India, U.S. trade deal, emergence of Middle East war, all these have led to sharp depreciation in rupee as against U.S. dollar and euro during the financial year, which resulted in higher translation losses. Currently, the critical event is to monitor the Middle East crisis. Any positive movement of resolution of this conflict is likely to support rupee. I would like to assure you that we are closely monitoring the situation and taking appropriate risk mitigating actions as required from time to time. And now to conclude, I would like to reiterate that our balance sheet remains strong. Our liquidity remains robust and our funding access remains well diversified across domestic and international markets. We remain focused on sustainable growth, prudent risk management, operational excellence and long-term value creation. Thank you once again for joining us today and for your continued trust and support. We can now have the question and answer session.

[Operator Instructions]

I'm Abhishek Agarwal from Motilal Oswal. Ma'am, 2 questions from my side. First thing is your opening remarks, you said that this year in a declining rate environment, the repayments were elevated and which is where a weakish or a lower loan growth than what you had guided at the beginning of the year. But more importantly ma'am, we also saw disbursements this year have also declined Y-o-Y in FY '26. So what is actually leading in other words, what has changed in the last 12 months where disbursements are weak, repayments like you explained are elevated? Is it competitive intensity other players who were earlier not doing power financing, infra financing have started doing now where these loans now, which is where the pressure or is it predominantly from the larger PSU banks which are kind of leading to disbursement also remaining weak?

On account of disbursement, I think we are more or less at par with the previous year. Last year, it was 1,65,000 -- 1,68,000, this year 1,65,000. So it's not a major. The main issue is the nature of disbursements which have been done. Earlier, the discounts were more and more taking the RDSS, which has a shorter tenure 6 months average maturity and they keep on revolving that. So automatically, disbursements get elevated, if you see. So that has changed this year. Now they are resorting to taking medium-term loans. So that has a maturity ranging from 3 to 5 to 7, something like that. So you will not see that rolling over of those facilities. So RDSS loans has majorly reduced. On the front of competition, yes, I agree competition is there. Banks are looking at the commissioned assets. So are we. We have also refinanced a few of the major generating assets specifically of the fund, but I think there is sufficient scope in the market and looking at the overall funding requirement of the power sector that there is a sufficient headroom to grow for all the institutions, if I say.

This is Shreya from Nomura. My question is on the sanction pool, if you can give some details about FY '26, particularly segment-wise. And a follow-up on that is a big portion, almost half of our sanctions between last 3, 4 years remains undisbursed. So there is a lot of files that we have which are yet to be disbursed. So in that context, the loan growth guidance of 10%, if you can help us understand why do we feel that a big chunk of that we may not be able to disburse in the coming year? And my second question is actually to do with the merger. Now both the entities had some 600, 700 employees doing similar roles. So what is the trajectory over there? How are we planning to -- as a combined entity, the same person -- there will be 2 people looking at the same account. So what is the plan over there? And any details around that would be useful.

If you see for the current year, the question was the sanctions. The current year sanctions are around INR 2.85 lakh crores. For any infrastructure financing, I think sanctions to convert into disbursement always takes time. It could be we sanction the loan, we put certain precommitment conditions which are required to be fulfilled before documentation. Then certain approvals are required for the disbursement. So when we talk of the infrastructure loans, lot many environmental conditions and others now you have the land acquisitions to be done, all such conditions are required to be fulfilled before the disbursements come. And in the initial year of construction, the disbursements are generally at a lower pace, which picks up as the project progresses and coming to the commissioning. So that is the reason where you will see the difference. If I talk of the current year sanctioned INR 2 lakh -- out of INR 2,85,000 crores, I think around INR 80,000 crores only has been disbursed. So everything is spilling over to the next year. It's not that we are not going to disburse it in the future. So that is a normal trend. I think if we do refinancing, then definitely, I agree that immediately disbursements happen. But for a construction project, it takes time. On your next question of merger, can you repeat that?

Yes. I mean it's the same set of 600, 700 employees on both sides, probably looking at similar profiles. So under -- I know the combined entity will be INR 11 lakh crore loan book, et cetera. But what kind of structural changes will employees be moved around across departments, et cetera? Any details on that?

Right now, till now, we have not worked out on the broader portfolio. But what I can say is that PFC and REC both have lean manpower. If you compare with any other organization, we are just 520 and the number for the REC. So we have 1,000 employees and looking at the portfolio. We would try to strengthen our functions where we need more focus. As we grow and since we are going to have the larger loan book, there has to be specific focus on monitoring on, I would say, the relationship management. So all these are going to be the focus area where both of us were already planning to hire more manpower. So beyond a certain state, I agree that you can't have a proportionate to the loan book, but there are areas where you need to strengthen. Compliances we need to strengthen, as you know that regulatory compliances are increasing day by day. We have a GIFT City subsidiary over a period of time that GIFT City subsidiary is going to pick up. So the staff will be -- REC has a number of regional offices. So if we want to have the regional presence and more focus and decentralize our sanctions and disbursements, then definitely more staff needs to be posted there also. So I think we will be able to fully rationalize the manpower.

This is Piran Engineer from CLSA. My question is also regarding the merger. So firstly, you mentioned, ma'am, that after the merger, you will try to maintain the status as a government company. But in a share swap scenario, the government shareholding will fall to 41%, 42%. So how are we thinking about maintaining that 50% limit as per Companies Act? And second is, as a combined entity, and this is more probably for the MD sir, that when we are borrowing from capital markets or banks as a combined entity, we might hit the limit that our creditors have, the internal limits. So are we thinking about borrowings from that point of view also? That's it.

On your second question about the exposure to be taken for the combined entity. In 2019, when PFC has acquired REC -- Government of India stake in REC. We both were individually borrowing -- our borrowing exposure was 20% for the -- majorly for the bank. So after that, we formed the group. So 20 plus 20 40 has reduced to 25%. And now from the 2 entities, the merged entity comes into picture, the borrowing limit is going to reduce from 25% to 20%. I would like to clarify that as on date, if you see the overall capital of the banking sector, we have exposure only with few banks, which has been utilized till now. With the increase in the banking, you know that their net worth are increasing, they are financially becoming more and more sound. So they have -- with some repayments and with the new exposures being available, I don't think that, that is going to be structured in this regard. Government company status, yes, everybody knows that the plain swap ratio application and SEBI rule, everybody knows. So the government of India stake is going to be below 50%, but the government has committed that they are going to maintain the status of the merged entity as the government company. So modalities and how all these things are yet to be decided. Whenever we have more clarity, definitely we will be sharing the guidelines.

This is Manish [indiscernible]. So my first question is you have guided for a 10% AUM growth here. But seeing the power demand, I mean, this is a wall or it can exceed from here in the medium term? The second is on the dividend policy. So if you look at you have 30% payout ratio, but you have to pay on the stand-alone. So basically, you paid 9% of REC dividend that you received, I mean, because 30% and 30% stand-alone is counted. So when the merger will be done, so basically, PFC dividend will go up in that sense. I mean, of course, there will be more share count, but still, I mean. So this is the second one. And the third one, I also wanted to check on your ROE profile because in the past, I mean, you have issues with the gross NPA and things like that. Obviously, you got back all the money, most of the money. But now I mean, things are improving on the distribution side. So from that perspective also on the merger, the cost benefit will be there. And also, I think the leverage can go up. I mean it's 11.7. So that can also help you strengthen balance sheet. So in that sense, what is the ROCE profile that we should look at something like 17%, 18% or you can guide here. The fourth one, basically wanted to check the step between the cost of borrowing on the domestic side and the foreign side. So basically with the hedging cost, of course. So now I mean, things are changing here. So do you still want to have 20% exposure from the foreign borrowings here?

Lot many questions in one question. So on the guidance front, as I told you that there is always more and more competition. Our loan book is growing. And on the growing loan book, we expect that our guidance is going to be that the 10% growth will be there around 10%. On the dividend front, right now, yes, dividend is taken as a part of PFC's income directly adding to the profit and profit 30% is going. So effectively 9% is coming to the investors. And once the merged entity is there, profitability of both the companies are there, shareholders will also be -- larger group of shareholders will be there. But you will see we are going to follow that the DIPAM dividend policy and whatever are the consolidated profit or the merged entity profit, dividend will be declared on that. And DIPAM policy says 30% of the profit to be shared as dividend, but this is subject to the rider of RBI guidelines also because for the NBFCs, RBI has also issued guidelines for declaration of dividend. On the NPA recovery, we already shared that of the total, 80% of the NPA has been resolved from the peak and now we are left with very little number out of the major portion is already under liquidation. We are not expecting much from that and 100% provisioning has already been done against that. For NBFC, we generally focus on the spread. So spread -- for the spread, we have already given guidance of 2.4% to 2.5%. And the volatility remains, I agree about the foreign currency number that's how the global market or how the rupee behaves over a period of time. For borrowing by PFC, we generally diversify our sources. And as of now, 60% has been borrowed from the bond market, 20% from the term loan from the banks and 20% from the foreign currency. For each borrowing, we do consider what is the scenario in the domestic market and what is the scenario in the bond market. So we have in consideration one, the cost optimization and other is the diversification of the funds. These, we try to balance between these 2 aspects before we decide borrowing from any source. And going forward also, we are going to continue with the same practice. So spread is being worked out on the weighted average cost, which constitutes both the domestic as well as foreign

This is Chintan Shah from ICICI Securities. So there are 2 questions. Firstly, on the cost of hedging result that has kind of substantially move to around INR 34 billion versus INR 1 billion FY '25. So given that on the hedging cost over 5%. Also assuming the depreciation of 4%, 5% in FY '27. So are we accordingly well-positioned or we could see some similar sizeable hedging cost in FY '27 as well. And also if you could give some impact INR 1 or INR 2 movement in the INR, how that could impact your P&L? So that's question one. And secondly, ma'am, you mentioned there were around 2.5 lakh of sanctions versus which there was 80,000 disbursements which is around 1/3. So kind of how much time would it take for the remaining sanctions or is it possible that once the project which have already sanctioned and given the loans once they are commissioned, it could be refinanced there, does that risk also possess? Yes, those are the 2 questions.

To start with your last question first, there is always a risk of competition which is there. This is the market. So everybody is free to refinance any of that. But what we are seeing that banks are more willing to do take or do refinancing on the renewable portfolio. Reason being the gestation is low. It turns out commissioning happens early, cash flows are certain and specifically, these are the low ticket sizes. So you will see most of the refinancing happening in the renewable space. So if you are in the market, you have to face competition. So that will always be there. On the hedging cost, there are various instruments of hedging. We have hedged 97% of our portfolio, but yes, because the risk has been covered in the specified range. Whenever there is an abnormal movement in the exchange rate, it is always happening. However, the actual loss is depending on the date of the maturity of the liability. If I say that whatever we are booking, it is a notional loss in most of the cases, except where it is on the maturities which are falling within the financial. So actual loss or gain will be known only at that time. But we are regularly monitoring and wherever required, the coverage range is being expanded to take care of the future volatility, so that regular monitoring is done. So I think that...

I'm Namit Arora from IndGrowth Capital. I have 2 questions. One is in terms of your target markets. Are you looking at expanding that in terms of other sectors, like, for example, nuclear is supposed to be promising over the next 5, 10 years. And also within the whole solar value chain, there is a lot of attempt by players for backward integration, forward integration, et cetera. So just trying to look at your target market, how do you look at that over the next 5 years? And my second question was the impact of the geopolitics over the last 3 months. There might be a lag effect over the next many quarters. So in terms of your loan portfolio, have you done some analysis of there might be some stress which might come up because of the detailed impact of the geopolitical situation on the companies that you lend to?

On the target market, we are -- our mandate allows us to fund for the power sector, backward and forward linkages, energy efficiency, energy transition and also the infrastructure. So when we talk of the nuclear, solar value chain, all these are nuclear, I think, for the financing, any proposal is yet to come because a lot of groundwork is being done for the nuclear project. Solar value chain, we are already into the manufacturing of the solar and wind equipment where we are focusing on the Honorable Prime Minister's focus is for the Atmanirbhar Bharat, so that the value chain is available within India. So we are there. We are funding for the battery equipment as well as the battery storage project, pump storage project. Apart from that, we are also working on the bioethanol side also, which helps to reduce on the basically petrol and more and more reliance on the petrol and diesel. And with the recent announcement by the Honorable Prime Minister that the focus is going to be on the electric vehicles. We are already there in funding of the electric vehicles. And with this announcement, I think the requirement of power is going to increase substantially because as on date, if we see we are self-sufficient in coal, solar and wind, we have the equipment manufacturing lined up. We have the storage, we have the hydro, where all equipments are majorly indigenous. So power sector is one which can take care of the future requirements and replace energy wherever possible. So we are open to all this and other infrastructure, we are already funding even though we are taking small, small steps. We are not going in a big way and in a rush to fund for the infrastructure project. On the geopolitical situation, again, it comes to the same thing. It's -- I would say it's a very -- should not say, but it's a positive for the power sector because power sector is going to help take out of the crisis situation for India as a whole. So on the borrowing, yes, something negative is there because of the volatility of the exchange rate. Otherwise, we don't see if some of the promoters have lined up some equipment or some supplies from other countries that could be adversely impacted, but that's not going to have huge impact and we are funding for the projects within India. So we don't see any major challenge.

I'm Ananya Shukla from Quest Investment Managers.

So my question is related to how are you seeing loan asset mix changing in medium term? It will be very helpful if you can please give the figures as well.

So on the medium term, what we are seeing is that we have been funding since our inspection. So our focus area was the conventional generation at that point in time. And the conventional generation you see was majorly focused in the thermal area. Hydro, we still have not much capacities within India. So we are seeing our mix changing from the fossil fuel to the non fossil fuel category. If you see our -- next is to the distribution sector. There was at one point of time, PFC's overall lending maybe around 75% towards conventional generation. Now we have moved from there to around 50% of generation of which, 15% is the -- renewable and the balance is the conventional generation. And major next is the distribution sector. So there has been a shift. And going forward also, if we see the installed capacity which is coming up in future, we can easily say that it's going to be a 70-30 mix of the conventional or thermal project vis-a-vis renewable and core will be the focus for PFC.

I'm Ramesh Bhojwani from Mehta Vakil. You've made an all encompassing presentation today touching every aspect of power generation, distribution, renewables and so on. You have mentioned one thing that the transmission and distribution losses have been now contained to 15.04%. I think this has happened because of the deployment of smart meters. Going forward, can we look to a distribution and transmission loss getting halved from this 15%?

See, I agree as a part of RDSS scheme, there were 2 portion. One is improvement in the distribution infrastructure and other self-provision of the prepaid meters. Prepaid meters have come up only in -- yet to be done. The DISCOM losses were majorly coming from, apart from the collection and the billing efficiency were coming from the legacy and the legacy dues where government department will increase the power. So they were the huge and as a part of RDSS scheme, the agencies and the criteria for RDSS scheme put the condition that subsidy has to be received in advance by all. So I can't say that everybody is paying in advance, but it is not being delayed in general beyond 1 quarter. So that has helped them to reduce their operational costs. On the government department due, most of the government departments have been instructed to put prepaid meters because in such case, there will be no issue of recovery. So that is one part. And more and more solarization, there is a scheme which is solarizing the pump in the agriculture area. Even though initial capital outlay is required. But however, in the longer run, it is going to reduce the burden of the subsidy of the state government source. So all these are the collective reasons and improvement in the infrastructure and RDSS scheme. So these are the collective reasons for improvement in the RDSS.

I'm Ashok from [indiscernible] Ma'am, RBI reduced the interest by 100 basis point. So I think our profit has increased. So currently, geopolitical situation and war and everything. Next year, if the RBI increases again by interest rate by 100 basis points and our all the loans has been restructured to lower rate. So what will be situation and how company will be facing the situation?

For PSP, our 55% borrowing is at fixed rate and that too has a longer tenure. If you say 60% borrowing is from bonds, so the reduction in the interest rate doesn't help us because there, we don't have the flexibility to reset our rate. On an average, the liability period is around 5 to 6 years. So our liability, which has been as on date, which is at a higher rate, it will take 5 years to retire. For PFC, it is always the impact of whether you talk of the increasing interest rate scenario or decreasing interest rate scenario, it's not sudden like banks. It is always a gradual movement. So the decreasing interest rate scenario that is why we were saying that we have a huge prepayment because our interest liability figures are not that flexible in line with the market. So that was the reason we had to face in the decreasing interest rate scenario huge prepayment. So being 55% at fixed rate, that gives us stability also that even on the -- when the increasing interest rate scenario is there, so the gradual transform of the rates is going to happen.

So how are you going to face the next year interest rate? So RBI may increase because the situation is different?

So when RBI increases, so it will slowly come on our balance sheet to the extent our repayments are happening. Our interest rate is not going to immediately react to the RBI rate. On the fresh borrowing, I agree the marginal borrowing which we are going for year-on-year basis, that is always on the current rate, whether it is increasing or decreasing. However, 2/3 of my book is going to be at the older. And whatever is the cost of borrowing our weighted cost of borrowing our lending rates are decided on that. So we -- I think for all the financial institutions has been that the lending rates are based on their overall cost.

Ma-am, Asha from [indiscernible] Ma'am, my question is particularly for the repayment. What is our repayment in FY '26 and it will be helpful if you split between renewable energy and other part? And my second question, the same with the last one is like you mentioned about the spread for FY '27, 2.4 to 2.5 vis-a-vis earlier we used to guide 2.5. So I just wanted to know, as you mentioned we have liabilities like repayment in between 5 to 6 year. So going forward in FY '27, 2.4 just because of the cost of fund because marginal cost of fund right now is increasing or like we see the lending -- pressure on the lending as well as competition bidding from the PSU and the other NBFC as well.

Definitely, there is a competition pressure and prepayment pressure that is where we are saying that our new guided range is going to be somewhere around 2.4 to 2.5. And I don't think that it has drastically reduced. This year, we have 2.5, in spite of the huge volatility in the ForEx. So had that not been there, so that would have been a different scenario. On the repayment front, we have -- during the financial year, we have INR 1,28,000 crores worth of repayments from our borrowers. So I don't have the bifurcation between the renewable and the other...

Shreepal Doshi from Equirus Securities. My first question was on credit cost or provisioning. The last few years, we have seen benefit of our NPAs resolving and that's why the provisioning has been negligible. However, incrementally, wherein largely -- large number of NPA accounts are broadly resolved, how do you see the credit cost moving, especially on, let's say, standard accounts provisioning?

Standard account provisioning, we have ECL policy where we say on an average, we provide first [indiscernible] under construction, we have 1% and 0.4%, that is the minimum subject to ECL. So we work out the expected credit loss and that. So eventually, when the -- that is, I think, broadly in line with the RBI guidelines. So I agree that we do have resolved all the NPAs and brought it to the lowest level. So going forward, we will not have the benefit of like you are saying that this year, we have INR 800 crore benefit from the resolution of the nonperforming assets. But definitely that the spread, which is we are working and managing of our borrowing cost is going to help.

Got it. Ma'am, second question was on the disbursement front. So what is our target for FY '27 in terms of the disbursement?

See, it's very difficult to say about the disbursement figure because it all depends the nature of the loan being disbursed. If suppose any of the distribution companies is coming to me for disbursement under RBPF, so it will be once they take and after 6 months, they roll it over. So the disbursement will be counted twice.

Got it. But ma'am, this year, we have taken the borrowing limit approval for 160, if I'm not wrong, INR 160,000 crores. So is it fair to assume similar disbursements for the full year?

So this year, we have as compared to the earlier year, the scheduled repayments are comparatively lower. So that is how you are taking -- seeing that we have taken INR 160,000 crores considering that there is going to be growth.

[indiscernible] Capital. Couple of questions. First, I wanted to know what's the total unsanctioned book, not for FY '26 total, whatever the spillover from FY '24, '25. So total unsanctioned book today? And out of which, how much are you looking to get converted, let's say, next 3, 4 years because of the time of the project? And the second one would be the new ECL norms which will come from next April, what would be its effect on our books and the way we are accounting?

So on your second question of ECL. RBI norms are if we say since we are under Ind AS, so they are not applicable to us directly for the purpose of profitability. Definitely RBI says that IRAC norms to be followed for creating that IRAC provision is required to be maintained. But however, if we see our current policy, broadly, they are overall basis as of now, they are in line with -- in sync with RBI. But we have been calculating ECL project separately. And our ECL provisioning is going to be governed by that. And whatever is the additional provision or appropriation from the profit we need to maintain that we will be maintaining. I don't see much of the difference. And on your, I think it's very difficult for us to give the sanctioned but not disbursed amount. But broadly, if I say it may be around INR 2.5 lakh crores to INR 3 lakh crores will be the figure. But I'm still not sure I'm broadly saying.

We'll take one final question before we wind up for the day.

Ma'am, there were certain media articles talked about some virtual PPA. And then in the middle of the year, there was an electricity draft by the government, which said CERC will be appointed to find a solution to the PPAs now that we are no longer financing long-term projects are shorter projects as well, et cetera. So if you can help us understand what is happening on the -- from the regulatory government front on making PPAs flexible because that obviously helps you in disbursing sanctioned loans faster.

See, I think on the PPA front, there has not been any major change. Virtual PPAs for the solar projects where we want to have the renewable energy certificates and all those things. I think a few of the multinational agencies have entered into such type of virtual PPAs. But on an average, there is the practices which is earlier also the PPAs are being signed by the respective states and the states are somehow in a realignment mode. Earlier, it was purely solar and wind projects. Now we are talking of the hybrid project. Now we are talking of the storage. So all these changes in the regulation. So states are also trying to align those requirements, and that is how it's taking some time. But I don't think that from the policy perspective, there has been any change.

And we are still only disbursing those which have PPA, right, not the ones where those projects are -- they don't have -- they have those -- they are linked to the network, but they don't have a PPA. Our role is still the same, right? We want PPAs for disbursal.

We have exposure on some merchant towers also depending on the strength of the promoter. Not all, but yes, on cases, yes.

Thank you, ladies and gentlemen, for your active participation, and thank you, ma'am, and a very big thank you to the PFC management team as well. And ladies and gentlemen, I'd like to take this opportunity to thank each and every one of you for taking time out of your busy schedules to be with us this evening. Thank you once again, and do join us for tea.