PTC India Financial Services Limited (533344) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I'm Bharthi, moderator for the conference call. On behalf of S-Ancial Technologies, we welcome to the Q4 FY '21 Earnings Conference Call of PTC India Financial Services Limited. [Operator Instructions] Please note, this conference is recorded. I would now like to hand the floor to Mr. Nikunj Seth of S-Ancial Technologies. Thank you, and over to you, sir.

Hi Bharthi. Am I audible?

Yes, you're audible, sir. Please go ahead, sir.

Yes. Good evening, everyone. On behalf of S-Ancial Technologies, I welcome you all to the Q4 FY '21 and year ended Earnings conference Call of PTC India Financial Services Limited. We have with us Dr. Pawan Singh, MD and CEO, PTC India financial Services. I now request Dr. Pawan Singh to start with the opening remarks.

So good evening, everybody, and thank you so much for having joined our call today. In fact, I hope each one of you who have joined, your families have been safe and you have been in good health. And whenever somebody has been affected, I hope they would have come out of it okay. In my own company, this time, in the first phase of COVID, only hardly very solitary case or -- people were affected. But in the Phase 2 of the pandemic, a large number of my officers were impacted by pandemic. And of course, very few of them had to be hospitalized. And fortunately, everybody has almost come out of the situation. Of course, post trauma is there in some cases. But everybody that we had in that situation was prevailing in Delhi, touch wood, compared to what it was, and people have been able to -- things have been good, so by and large for PFS from health dynamic. And I expect that things would be much better because COVID, I believe, was much better managed the way Delhi, this crisis, could go beyond proportion. As far as PFS is concerned, in this backdrop, we are presenting this -- in that scenario, we are presenting our Q4 results. And let me, first of all, tell you as to -- for the entire year, we were able to do a sanction of INR 4,100 crores against actual sanction of INR 3,000 crores in the corresponding year. So despite COVID, our sanctions have substantially -- almost 30% increase in the sanction took place. Disbursement, we were able to do as much as a -- what, a little better than what we did last year. It was close to INR 2,590 crores and, this time, we did close to about INR 2,700 crores disbursement. So there was some improvement in disbursement. This was notwithstanding the fact that first quarter we hardly did any disbursement. In second quarter also, we were very, very cautious on making disbursement. Despite that, we have been able to do a very large quantity of sanction and disbursement. So on the business side, we are continuing to be optimistic and bullish. And the first quarter, which is going on now, the growth in business from that angle also is flowing into the next quarter. Also, when I talk about business, what is very important for each one of us to know that we have tried to -- we are trying to present ourselves as a green, sustainable, infrastructure finance company, which is -- but another part of this green, sustainable infrastructure finance company, what we call our motto is additionality and sustainability. So not only we are doing green sustainable projects, but we are bringing additionality. So that way could give you a little bit as to what I'm talking about in the additionality factor. What we are now focusing really substantially is things like list management, urban sanitation, sewage treatment plants, water infrastructure, electrical mobility, decentralized power generation, renewable, and that is an area -- and of course, the third-party PPA or what we call group captive renewable energy where many of the conventional lenders don't -- are not very bullish, and that is a space which we are trying to capture. Of course, on the -- this is business going forward. And fortunately, what has happened is that in this space, a lot of regulatory clarity is now available than what it was before and very, very robust PPP models are being opened in the areas of urban sanitation, water -- clean water management, e-mobility, e-vehicle manufacturing. So that has given a good opportunity, and we have started it in a very, very -- you can say that in a very, very substantial way that we have started in these areas. Of course, renewable continues to be our -- still continues to be a very, very significant portion of our loan book. And any additional business also renewable finds its own importance the way it has found in past. But also the new areas, which I have mentioned, fall into our priority. And road HAM projects, again, we put it in the same category or most similar category. The size, of course, is growing up. Today, it doesn't constitute that portion -- large portion. But whatever, in fact, sanction of distribution we did, road constituted almost 10% of the sanction and distribution. And even the e-mobility constituted almost 10% of the sanction, which we did in the -- going by financial year. So business has been, despite COVID and hiccups in the first 2 quarters, we have been able to make up on the business. And as I said, we are bullish. The sanction and disbursements, we'll continue to do. And we'll -- this year, we'll get the advantage of what we missed in the first 2 quarters. Other than in third and fourth quarter, what we did, improvement over that in the first and second quarters, we would try to also do it the way which we have done the first and second quarters. So far -- in this quarter itself, so far, we have already done a sanction close to about INR 1,400 crores. And one more Board meeting we are planning by third week of this month where we would try to do more sanctions. So we are fairly upbeat about the business growth. Of course, coming to the performance of the company. In fact, the details will be given by our colleagues, Mr. Naveen Kumar, who would also give you a business overview, risk and challenges, constraints and so on. And of course, followed by Mr. Sanjay Rustagi, who would give you in-depth financial numbers. But just to give you an overall bird's eye view of the financial numbers, the very important thing here is that NII, which is, I would say the heart of any particular financial institution. So NII improved from the previous quarter. It grew where it was INR 91.8 crores, improved to INR 96.4 crores. And compared to the first quarter -- sorry, the comparative quarter of the previous year, it improved substantially to [Technical Difficulty]

Yes, please go ahead, sir.

Yes. So if I compare it with the previous quarter, sorry -- compare it with the previous quarter, then it has gone up from INR 77 crores to INR 96.48 crores. And if I compare it with the corresponding quarter of last year, then it has gone up from INR 91.87 crores to INR 96.48 crores. So -- and on the yield, we have -- the yield has improved from -- yield is 11.13. And the cost of fund was, for the year was 8.42 and spread has been for the quarter close to 3%. And net interest margin has been close to 4.24%. Gross NPA stands at 7.64 compared to 8.44 in the previous quarter. And net NPA comes down from 4.46 to 3.04. So this is our performance bird's eye view. And what is very important is that our provision coverage ratio has gone up to 62%. Also very important to know is that the NPAs, net NPAs, which we have today, we stand at net NPA of INR 313 crores. And out of this INR 313 crores, the 3 large accounts, which we have in the net NPA, which is NRSS, which is roughly about INR 217 crores gross NPA and roughly about INR 158 crores net NPA. And other one is Meenakshi, which is net NPA close to -- gross NPA is INR 150 crores and net NPA is close to about INR 90 crores. So INR 158 crores plus INR 248 crores is -- out of this INR 330 crores is, we have already reached the resolution process. And hopefully, in case of analysis, we have gone through a bidding route, and we have got 3 bids. And hopefully, within a week, the committee will finalize the bid, and we will put up the proposal in the next Board meeting for the approval. As far as your -- this -- the other project, which I said, Meenakshi. So that also commenced the NCLT route. The resolution offer has come. And the -- as soon as the -- because NCLT was closed in the month of -- this month only, the NCLT has to start. It's working. So this resolution plan will be filed before the NCLT for the resolution. And so this is -- of course, gross NPA and net NPA, that is INR 88 crore. And this -- the other items, which, of course, in detail will be taken by my colleague in his detailed presentation against what are in the NPA, what is the current outstanding. But maybe now we are almost towards the end of the provisioning cycle. And one asset -- because this year, we made a -- instead of -- we would have normally -- because NII close to about INR 100 crores. We would have made a very good profit except that in one case, we did the provisioning of close to roughly about INR 87 crores, INR 88 crores. And this is where -- this is Nagapatnam, but we have a resolution offer of INR 90 crores, which is under consideration of Board. Until Board takes a final decision on that, the -- as a matter of abundant good corporate governance and reporting, we have done it as we showed it. We made the provision in this quarter. And because of that, our -- what had to come at a profit, we have been net-net INR 53 crore loss. If we would have not provided for this amount, then we would have -- to that extent, we would have made profit in our books. Also, there was this old issue of land, which PTC as a group has invested. And we as a part of PTC Group also had decided that we'll set up a separate office. And that land, a part of recovery has happened. And part of recovery is with the state government where it will be time taking. So both we have decided to make a provision for that additional INR 10 crores. So this would also -- normal situation would have added to our profitability. So all our operating parameters are concerned, the NIMS, the spreads, gross, net NPA, the NII figure, everywhere, cost of funds, everywhere, we have been able to show improvement, distinct improvement. And not only we have shown improvement, but the trend will be -- so 2 things I would -- the 2 takeaways from my initial remarks should be that we are going to grow substantially. And the growth, as I said, 2 quarters last year had not happened, and that will be compensated also in the current year. And we would continue to focus on new areas and additionality and sustainability, where opportunities are there, apart from our traditional renewable and road HAM projects and other infrastructure projects. Of course, on the liquidity front, which continued to be a challenge last year, our liquidity, at least, now is very comfortable. And we always had overbought position, except last about 18 months, which went by, where post ILFS crisis, generally NBFCs were facing problem. And we also had to go through that challenge. But today, we have ample liquidity, close to INR 1,800 crores undrawn limit is available with us. So that gives us -- liquidity has 2 aspects. One is, of course, the liquidity itself, which gives us the comfort. And our long-term to short-term ratio is also very good. It is over 91% [ thereafter ]. So that gives us an opportunity to -- also because when you're overbought, it gives the opportunity to reduce your cost of capital. So going forward, we should be able to further reduce our -- we have reduced our cost of capital substantially. We will be able to reduce our cost of capital even more. Also, it's very important that the as I said, net NPA have come to INR 313 crores. And most of it is -- and in fact, the -- as I said this, most of it, the resolution plan is at a very advanced stage. I would say, a very, very significant portion of this amount that will be very advanced stage. And in all these cases, we are going to get value close to the book value of the asset. So that is why I said probably, we have reached the end of the provision cycle because all these cases of our stress assets, were legacy assets, primarily arising of thermal assets and also 1 or 2 hydro assets. So from that angle, probably that pain, which had been hurting us for so many years, and in fact, the last pain of it is also reflected here in our -- this quarter's result. But then there is silver lining there because I have already said that INR 90 crore offer is available with us. So that offer is subject to certain -- meeting certain conditions. We would -- the Board will take -- it will be up to the Board for approval. So that means that not only the provisions would be substantially reduced, or I would even take the liberty of saying very, very insignificant kind of provisions should happen in the future. But if we are able to sail it through with this 1 or 2 riders, which are there, and if we are able to sail it through our Board. So in next few months, then probably this INR 90 crores also will be seeing the light of the day and would see some kind of a write-back possibility also happening. So there's a lot of optimism at this time because what I have always been saying that we are reaching towards the end of the tunnel. But now I can safely say that we have come out of the tunnel. So that would be my punchline. And once you have come out of the tunnel and you're on the highway, then you have speed, acceleration. And nature of business is totally different from what you have done in past. So thank you so much, and I'll leave it to my colleagues now. First to Mr. Naveenji, and then, of course, the detailed numbers by Sanjay. And of course, Sanjay will also give you analysis of -- he will do some qualitative analysis to back that numbers, how these numbers not only look in figures, but also how to qualitatively reflect. So -- and then, of course, we'll have -- we'll be very happy to take any question of yours. Thank you so much. Over to Naveenji.

Thank you, Pawan Singhji. Good evening, friends. It's always a privilege to interact with you all. Just to explain a few things from my side. Despite turbulent year being faced by the economy as is known to everyone, PFS could still sanction debt aggregating to about INR 4,398 crores in the financial year 2020/'21. We see initially, the sanction was low in first half of the financial year '21 due to the impact of the COVID-19, because of which PFS could sanction around INR 350 crores during this period. As we shared in the past also, there were different kind of problems being faced. Not many projects were coming up. There was delay in getting clearances, linkages, et cetera. So the sum total of all these things, it's resulted in getting very few projects, and the process of sanction of loan getting slowed down with all the financial institutions and PFS, et cetera. And then, however, PFS picked up its operation in second half of financial year '21 and could sanction additional of about more than INR 4,000 crores in the second half of financial year '21. And this included a sanction of around INR 2,300 crores alone in the quarter 4 of the financial year. Friends, during the year PFS forayed into new sectors like e-mobility space, wherein PFS sanctioned around INR 400 crores to 3 projects. And additionally, PFS also sanctioned around INR 86 crores to one of the sewage treatment plants in Patna under Namami Gange program, for which loan agreement has already been signed. As you may kindly recollect, a similar project was earlier sanctioned in the Prayagraj area under the Namami Gange program. So we are continuing with our endeavors in this area also. PFS is also endeavoring to foray into newer segments like railway wagons, desalination plants, charging infrastructure for e-vehicle, for which various opportunities are being explored. And during the last year also, we had worked very hard to look at the opportunities. So during financial year '21, PFS disbursed about INR 2,650 crores, which includes disbursement of INR 1,331 crores alone in the quarter 4 due to slow economic activity during the first half of the financial year '21 where we could disburse about INR 435 crores in the first half, which picked up later on. And during the second half, the disbursal achieved was more than INR 2,200 crores. And this indicates that as soon as the situation started improving and some improvement was noticed, immediately, we focused our energies in this area. We came into action, and we grabbed the available opportunities and enhanced our sanction and disbursement in a significant manner. Now just to share with you or to summarize the portfolio summary as on March 31, 2021. Total sanctions, they are of the order of INR 15,380 crores and disbursal is of the order of INR 12,470 crores. Total outstanding is about INR 10,752 crores. This outstanding constitutes this generation domain as about 52%; transmission segment about 6%; road around 8%; and port is around 1.4%; then water infra is around 0.3%; electrical mobility about 2.2%; and then corporate debt is of the order of about 32%, which includes the state sector DISCOMs, then private sector power projects and some nonenergy value projects also. And friends, PFS does not foresee any significant concern in case of borrowers where projects have been commissioned and completed. Projects which are under construction, like road and transmission project, concerned government authorities have given extension for completion of projects in many cases. Many projects got completed even during COVID-19 period. And though there are challenges with respect to the payment cycle with few DISCOMs like Telangana and AP DISCOMs to our borrowers, but in almost all the cases, the promoters are bringing sufficient cash to address cash flow mismatch. AP DISCOM has released certain payments during fourth quarter of this financial year 2021. And what I understand, the next hearing in AP High court is scheduled on 28 June 2021, and all the developers are expecting favorable decision in this regard. Regarding our monitoring endeavors, we keep a close eye on the project performance with respect to PLF, billing, payment cycle, monitoring of TRA balance, financial analysis. We undertake site visits of our lenders' independent engineers. They also undertake the site visits. We review their performance. They submit their reports. We analyze such reports critically. And same is true for our lender financial adviser also, which helps to ensure timely servicing of debt and identifying the stress at an early stage. And our monitoring team is all set to look into such kind of issues. In case of any abnormality observed, we take all the necessary steps with borrowers to keep the thing in shape. Our early warning signal framework has been well-established over the years, which is linked with internal credit grading mechanism. This helps the company in identifying the stress in the loan account at early state itself. And because of that, we are able to identify loan accounts having problems in the initial stage. And many projects have been prevented from slippage into NPA accounts by taking early steps, corrective measures such as reduction in O&M costs, even up to 40% to 50%, improvement in planned hold factors, [ closal ] of some loan accounts by ensuring early repayments. Now with rigorous monitoring, EWS loan accounts have significantly reduced to only about 6 to 7 accounts. And we see further drop of another 2 accounts in this first quarter of this financial year '22 itself. Risk grading model is all there in [ SAP ], there on the reset date, model officers are monitoring initiates of [ Bar 2 ], which is approved by the monitoring head. Then this is reviewed by the risk scheme loan officers, and post all the checks and satisfaction, it is approved by the risk [ scheme ]. So this doublechecking is there in this regard. Risk grading is an annual process, and each account is assessed once in a year, but for EWS accounts, where grading is 7 or above, this process is run by the monitoring team every quarter. Just to share with you our -- this next year's plan, I mean, for the year 2021-'22, we proposed to fund this renewable energy projects as MD and CEO has also explained to you, transmission, road, then other -- in other areas. Then, of course, DISCOMs, then corporate loans in the power, corporate loans in the infra and others. This -- roughly, we have budgeted the total sanction and disbursement in this area, just to share with you regarding the proximate percentages. Of course, it is a dynamic situation. And we have to readjust our operations during the course of the year. So this renewable may be around about 30%, 32% part of the total disbursement. And transmission could be around 7% to 10%; road also 9% to 10%; and DISCOMs would be in -- the corporate loans in the DISCOM segment, it should -- it could be around 20%; and in the power segment, corporate loans could be 5% to 6%; and the corporate loans in infra and other sectors, 17%. So the total corporate loan, they'll add up to around 40% to 42%. So sanctioned budget may be around INR 7,000 crores or so, and disbursement would be more than INR 5,000 crores. So with these words, I would like to stop here. Thank you so much for giving me a patient hearing.

So thank you, Naveenji. Very, very crisp and very objectively presented. Now I'll request Sanjay to take you through detailed numbers, and then we'll have the Q&A.

Yes. Welcome to all participants. I'm just giving you the -- I'm giving the financial numbers to you for -- first, I'm giving the comparison of the quarter '21 -- the last quarter of the financial year '21 with the last quarter of the financial year '20. The net interest income for the Q4 '21 has increased to INR 96.48 crores as compared to INR 91.87 crores. Profit before tax and the profit after tax for Q1, which stood at a loss of INR 30.54 crores and net loss of INR 53.66 crores. During the Q4, PFS has completely provided of the one of the loan account that is because of the NSL Nagapatnam. And in Q4, we made a provision of INR 57.5 crores. The loans sanction during the quarter stood at INR 23.29 crores, an increase of [ 64% ], and the loan disbursement increase by [ 160% ] to INR 1 crore as compared to the previous corresponding quarter. The yield on earning assets has stood at 10.98% as compared to 11.66%. Debt-to-equity ratio has improved to 4.37% as compared to 4.43%. The adjusted net interest income margins improved to 4.24% as compared to 3.38%. And the adjusted spread for Q4 '21 stood at 2.98% as against 2.68% in the [ year ago ] quarter. With respect to the Q4 versus Q3 of the current financial year, the net interest income has improved again to 96% -- INR 96.48 crores as compared to INR 77.25 crores. And the net interest income as a percentage of total income for Q4 '21 improved to 30.51% as compared to 28.7%. Yield on the earning assets stood at 10.98% as compared to 11.25%. This is because of -- there is a change in the PFS benchmarking by 20 [ basis ] during this quarter. The net interest margin earning portfolio increased to 4.24% as compared to 3.53%. Adjusted spread for Q4 stood at 2.98% against 2.86%. And some of the financial highlights as on 31st of March 2020. The total loan book as at March 31 comprises of INR 11,094 crores, constitutes of the loan outstanding of INR 10,751 crores, and the non-fund based commitment aggregating to INR 343-odd crores. The gross nonperforming assets stood at 7.64% and net nonperforming assets, net NPA at 3.04%. And the capital adequacy ratio as of March 31, 2021, stood at 23.95%, which comprises of Tier 1 capital of 23.55 and Tier 2 capital of 0.4. And the debt equity ratio, which is very comfortable at this point of time, is 4.37%. During this quarter, we have made 2 exceptional expenses. One is the additional provision on one of the loan accounts. The promoter is offering the settlement of INR 90 crores. And another is the land advance, which we have provided for around INR 10.40 crores. And so this is all about from our side.

Yes. So thank you, Sanjay. Now we can invite questions and clarify any doubts if they are there.

[Operator Instructions] First question comes from Sameer Dalal from Natverlal & Sons Stockbrokers Ltd.

So I had actually first a point to make. The presentation that you've uploaded on your website is not uploaded properly. If you could have that redone, please. Now coming to the 2 questions that I have. The first question is in regards to the NPAs. You said that you are at advanced stages of NCLT in a lot of these cases. What kind of recovery, if any, are we recovering on an actual basis versus the provisions that have been made? Or it will just be that now no more provisions will be required, but we will not have any recoveries from any of these assets? Second, the total Stage 3 is quite large at about INR 1,300 crores. If you can just throw some more light on what exactly, I mean, is happening to the Stage 3 assets?

Yes. So thank you very much. And of course, I have asked my colleague to upload it again. I hope it meets the requirement. If it doesn't, please let me know, so that we'll do the more corrective action. As far as the NPA accounts are concerned, as we said that net NPA has come down to the 3.04%, and which is amount-wise, Sanjay, it will be?

Net NPA, INR 313 crores.

Now out of this INR 313 crores, what we have. The largest chunk is NRSS transmission, which is roughly about INR 159 crores. So this is more than 50% of my net NPA. Now here, as I said, that we have received 3 bids, which are substantially closer to the amount, which has been given, right? So we are trying to improve upon that. And we are hopeful of getting 80% plus of the value of net NPA.

And how much is [indiscernible] particular asset?

Sorry. How much has been provided for? Yes, provision, we have made to close to about INR 48.14 crores.

Did we actually see a net recovery, that's what my question was.

Yes. So my INR 158 crores is my net NPA, which is lying in my book. And I said that almost -- because, see, I cannot -- because we are still at the stage of negotiation, final stage with the bidders, which we should complete in the next 3, 4 days. But I feel that closer to 15% is practically possible.

80% of the net NPA, not of the gross value?

No, of the net NPA.

Okay. So you will still have to wait for the provision?

Yes. Yes. So 80% will be there or it could be better that we are trying to work on that. So this is the only large amount which is left with us and where some -- between the -- from -- between anything from 80% plus recovery -- 80% is almost certain and 80% plus kind of a recovery would happen. Then there is this case of Meenakshi, 66.25 is the net NPA. The loan amount was INR 150 crores, INR 69 crore have been provided. And INR 15 crores, we have transferred to impairment reserves. And out of this net NPA, the resolution plan what we have got is matching the value of net NPA. So we are -- there, we don't expect any provision to make. And this would -- these 2 constitute almost close to 70% of my net NPA figures. Balance would be small amounts, KSK Mineral, INR 24 crore. And then we have Athena Chhattisgarh, we have net amount against INR 189 crore loan, we have provided INR 170 crores. And only roughly INR 15 crores is left. So this plus Athena that is roughly INR 40 crores is what is left. So since the amount is of negligible value of what is net NPA amount. So -- and since these assets are there already at various stages of resolution. So we are hopeful of getting whatever is there. Apart from that, which was one amount about NPA, which was the NSL Nagapatnam, INR 125 crore, where we have made close to about INR 88 crore provision. And we already -- since we have already made the provision, 100% now. So against INR 125 crores, I have told already we have got the offer of INR 90 crore -- to those 2 conditions being met. This will be put to our Board for approval. So here, we are expecting some write back to happen.

So if I were to ask what kind of credit costs should we expect in financial year '22?

We have told you the numbers which we have. So like -- as I said, that in case of NRSS, we are getting close to -- so probably we can say safely that on my total expense, what I have, you can say that credit cost almost -- so my credit cost will be close to 0.3%.

0.3%. And this doesn't account for the recovery, right, of the INR 90 crores you talked about.

Yes. Our presentation is loaded now, and it's to your satisfaction.

The next question comes from [ Ujwala Kumar ], an individual investor.

My question is regarding the net profit. Can we expect the profits will grow in the coming financial year? That is one of my questions. And second question is, what is the net interest margin right now our company is reporting? And what is the future net interest margin can we expect?

So as CFO very clearly said that on the running loan book, we have a net interest margin of 3.47% for the year. And for the quarter, the net interest margin is 4.24%. So this net interest margin is -- we are full up maintaining for 2 reasons. One is that the loan book, which we are going to grow, number one; number two, the type of loan book which we are growing, we are entering into new areas. Also, we are trying to do the launch, which are high yielding. And also, as I said, that the cost of borrowing has come down substantially, and it is on a downward movement. And since we are overbought on the liquidity front, we hope to reduce our interest rate further. So it will be from quarter 4 of 2020, my interest rate was close to 9%, which has come down to 8% in quarter 4 of 2021. So almost close to 100 bps reduction, which has happened, which is a very big reduction. So we expect further reduction also in the spread as we are overbought, and we are trying to -- we have been refinancing our higher cost of borrowing with lower cost of borrowing. And as I said, our long-term to short-term ratio is 92% to 8%. So there is a cushion of shifting to short term more as the liquidity improves. As we move to short term, the cost of borrowing comes down. So we are confident of maintaining our NIMs and spreads. Since NIM is also a factor of -- because when you grow your loan book, so you dip into your equity. So best comparison is spread rather than NIM because that is my actual presentation of my efficiency. So spread, definitely, which has improved from 2.61 to 2.71, this is an area where we would -- you will find a distinct improvement going forward.

Okay. Can I expect the -- like how we use to report in the year 2016 or 2017, so those financial years -- kind of financial performance, can we expect in the coming year, sir? INR 400 crores of net profit, around INR 300 crores to INR 400 crores of net profit used to be reporting -- that is what I remember, in the case of 2016 or '17. Can we expect a similar kind of performance from the company in the coming year?

In those years, some of the years, we had equity, and we sold our equity investment. So profitability jumped up to what it was. So now whatever profitability is coming, it's primarily out of our business operation. So as I said, our NII is close to about INR 100 crores. What has been a dampener for us in the last 2 years is the very high provisioning cost. And I said that my credit cost has been ranging to almost 1.5% to 2%, which will come down to anything close to 0.3% range, around that. So if I note my borrowing cost with the credit cost. And if I maintain the NII of close to INR 100 crores, so we can expect a very good gross margin. I will not say that it will be the numbers which you have, but then I've already given you the numbers that what you are likely to get in the future years, which has to be with the credit cost coming down, with spreads going up. The profitability should look much cleaner than what it has looked last 2 years.

[Operator Instructions] Next question comes from [ Rajindra Shah, ] an individual investor.

Any development on the divestment of PTC India stake? Any due diligence has been taken? We are not hearing since from the loan what is the status, sir. So any update on this?

I can only say some due diligence has been carried out because some due diligence has been carried at our end.

Due diligence has been carried out?

Some due diligence carried out. But we -- what is the final outcome? That it will be better if you ask PTC.

That is there, but due diligence is over from our end, sir?

See, whatever is asked in due diligence from us, there are due diligence -- we have some role to play. What has been asked for us, we have provided.

That has been provided. So our book has become clean now?

Yes. I note our book has definitely become much cleaner.

Much cleaner because as you have said that the net interest margin and other will remain poorly in the next year. It seems to be that our books are already clean now.

Books are clean, definitely very clean. And I have told that the credit cost is going to come down substantially. I have also given you an indicative back-of-envelope number also as to what my credit cost will look in the future.

Sir, if you can give the update when the due diligence is completed?

Sir, it is like this, that due diligence is completed by PTC. We have -- it happens at our end. To that extent, we have cooperated and given whatever was required by PTC. Now it is for the PTC to complete the entire exercise because it would not stop at our level. There are other things which they have to do or maybe they'll require something more, we don't know. So ultimately, final decision they have to take. So they have to -- because we can -- my telling at this stage will be conjectural.

It is right, sir. I understand, sir. But when due diligence from the PTC side was completed, sir, PTC India?

That again PTC will answer. We will not be able to answer.

As you know that they have done the due diligence, when it was completed, sir? That is the only thing I'm asking you. It was completed before 3 months, 6 months.

It's more than 9 months back. It was completed more than 6 months.

Again? Your voice is breaking, sir.

Due diligence completion is not so clear, but we have provided our information long back. Final status is not known to us. You can speak to...

[ Rajivji ], now the earning call is there for PTC. Very soon, you will get...

Yes, yes, there, I will ask there, but in our particularly, they had taken a due diligence nearly 6 months back or 9 months back. So that's the only thing I'm asking.

My CFO has given you that indication that, from our side, certain diligence has been -- as far as we are concerned, our portion, whatever was given to us, that has been completed long time back.

The next question comes from [ Pranesh Parik ] from [ SSPL ].

I had one simple query, which was more or less related to the overall COVID situation. So I just wanted to understand, like if I want to quantify, when can we quantify the overall provisions or the additional losses that we had to book on account of COVID during this current financial year?

Yes. Sanjay, you answer that.

So there is no provision because there's no new slippage of account because of the COVID. So there is no such provision we have to make on account of the COVID because most of our projects are the project loans. Even for the renewable energy, the government gives them the must done status. And as for the must done status, they are injecting the power on the we're are getting the payments, except for a few DISCOMs, there is a delay. But there will be a temporary issues. And most of the borrowers are making the payments on time. A few borrowers are in the moratorium. And after the moratorium, they are making the payments on time.

Okay. Okay. That's great. Okay. So I think then in that case, there's one single thing, which we can derive is, the overall profits or whatever things, margins and everything were impacted this year were not because of any COVID-related additional provisions, but it was because the business has slowed down overall because of the COVID situation.

Let me answer this. See, overall, we have said that our -- if you look at our sanction numbers, against last year's INR 3,000 crores, we have done INR 4,100 crore. So there is almost a huge, more than 30% -- 34%, 35% increase in the sanctions. So we really can't say that business has hampered for us. Yes, of course, Director of Operation did mention that we were slowed down in the first and second quarter. And because of this, this number could have been even more impressive than what it is looking like [indiscernible] last first and second quarter because of that. But there has no -- been dampening of the business. Our PAT for the quarter has come down only because we did INR 80 crores additional provisioning for the loan account, NSL. For that, we have already told that we have an offer of INR 90 crores already lying with us. So -- which are subject to meeting 1 or 2 conditions. The Board -- we'll put up to the Board for approval. So that was the reason why it happened. In fact, it is only -- in fact, if you look at it, it is only a technical provision, not really a provision because when you have an offer against that, effectively, the cash is going to come. That is the only reason that hypothetically, the balance sheet is looking -- the profit, quarter profit is looking a little dampened. But then I said that we continue to maintain the -- in fact, Director of Operation very clearly mentioned the kind of business growth we are likely to happen. He also said what are the kind of operating parameters on this business growth we are going to maintain the kind of spreads, the kind of NIMs we are going to maintain. We also mentioned that the provisioning cycle is for us over. So a large part of provisioning has been absorbed in the system last 3 years. So provisioning cycle is also come to an end. So with this, you should see the impact happening from the current year.

Next question comes from Aditya Mundra from Mytemple Capital Advisors.

Sir, what is our Stage 2 amount, sir? What is your Stage 2 amount as on March 31?

Sanjay will also give you Stage 2 and also give you the status of Stage 2 and most stages of resolution, it is. So you'll get a very good picture from Sanjay.

And then I'll come back to the other questions after that.

Yes.

Stage 2 headcount is close to INR 900-odd crores. And in this INR 900 crores, or so, there are 3 big accounts, which I would like to tell you. So 1 account is pending at 2 transmission line, which has an amount of INR 242-odd crores. This account is relating to Sterlite group. And it has been prepaid by the borrower in the month of April. So out of this INR 912 crores, INR 242 crores is already cleared. One more account is the [ area ] manager that close to INR 194-odd crores.

What is the name?

Manager is Expressway Limited. There is road so [ community 2 ] manager. It is operational from last 2 years. And there are -- because it pertains to the [ Astel ] Group, it has been classified as Stage 2. The annuity has already started coming in. And as on March 31, 2021, there is no overdue in this account. But saving -- it is a relatively difficult group, we keep on monitoring this account. And that is the reason it is being put under the stage 2. Another account in the Power corporation. It's a hydro account close to -- the exposure is INR 160-odd crore. And this account is expected to be commissioned by the June -- June 31. And once this will be achieved, then this account will go out of the Stage 2. That is our initial assessment. On signing of the PPA, they are undertaking from the account -- the price recovery prices may take place, and then it will be expected to be out from the Stage 2 account. So total of these 3 accounts close to INR 900 crores out of -- sorry, INR 600 crores out of INR 900 crores. There are a few new accounts like [indiscernible] Sunil Hitech [indiscernible] and to all those mostly are the young projects. The amounts of rupees are -- there is an outstanding of INR 34-odd crores has been paid by them by this time by -- as of today. And there is one account Tulip because the promoter has been classified at this Stage 2, like in Sunil Hitech because of the promoter, it has been placed as a Stage 2. So now the post NCLT order, promoter is getting changed. When the equity share transfer to a new promoter. This account is expected to be out of the Stage 2 account.

Understood. Understood. And sir, is there any account which is under restructuring as on March 31?

No. So there is no account under restructuring, which is under Stage 2 or 3, which is not part of this thing. But in Stage 1, there is no restructuring.

There's no restructuring, okay. And sir, in this quarter, we have sanctioned INR 2,329 crores. Could you give a broad breakup of how much would be renewables? How much would be structured finance? How much would be the new infrastructure, the urban interest in which is e-mobility, broad percentages here?

Yes, I'll tell you. So 20% solar, 10% wind. So I'm giving you a round-up figure. Transmission, another 9%. Road, another 9%. Electrical mobility, another 9%. Water infrastructure, 2%. Port, another 2%. Then your -- then I have given, again, renewable at corporate debt, another 6%. Then again, it's road work and other infra including ports. Again, we have given 13% as the corporate debt.

Okay, this will be about 85% only, 85%, 90%.

Balance we have given to straight transmission and state power utilities having A category rating.

Okay. And out of our total portfolio over INR 11,000-odd crores, how much would be government sector and how much would be private sector?

Yes. So government will be only -- these are state power transmission and distribution.

INR 2,400 crores is at approximately to be government -- so INR 2,400 crores will be government.

INR 2,400 crores. Okay. Okay. And sir, one final question, sir, we have seen some bit of increase in the admin expenses in this year also as well as in this quarter also compared to last quarter as well as the same quarter last year.

Yes. Actually, as I told earlier, so there is a -- we have paid around INR 10 crores as the fees to the [ meera ] for the transfer of the land. So a provision of that account has been made, and that is part of the other expenses. And that is the reason INR 10 crore is coming under the other expenses.

Okay. INR 10 crores the...

Apart from this, there is a CSR obligation on the company, around INR 2-odd crores based on the profit of 2% of the last year profit. So INR 2 crores has been spent by the company during the last quarter, and that is also becoming part of the other expenses. So INR 12 crores...

INR 10 crore is what, sir? I missed it actually.

There is a capital advance in the form of stamp duty paid to [ meera ]. The provision has been...

I told you that we were office PPP. So now we are not going ahead with office. But till the amount we have recovered from the we have made a provision for that. And if amount comes back to us, we'll add it back.

And this was made in FY '21 or quarter 4, FY '21, basically?

This provision has been made in Q4 only.

The next question comes from [ Vijay Shargha from Credit Star Investment ].

Congratulations on a good set of numbers. Sir, just I wanted to understand how the new book, basically, the kind of transformation journey that we are taking from the usual power transmission generation business to the new businesses. How is the overall profile? Or basically, you can see the basically, credit cost and all that, how is it evolving? Because -- however, the exposure is small to all this sector because if I contribute to 4%, 5%, 6% each. But how those sectors are behaving in terms of the receivables as well as how the cycle is moving? So what is your experience in that?

See, as far as we are concerned -- see, we have learned and we have delearned, actually all these years, by burning our finger also in some places, having some good experience also in many places. Some learning, delearning has happened. We have also learned what not to do and what to do. We also learned, keeping our strength and capability, what we should do. And we also learned that we cannot be everywhere, and we have to be focused. Also -- we also learned that when we are focused, the focus has to be not so much that we lose on business opportunities, especially the new areas, which are emerging areas and where there are some areas which are likely to become the -- can I have the background, can somebody be muted, please? Please, the background can be -- please, somebody can mute.

Sorry to interrupt. Sir, Vijay sir, can you please check the background noise from your line. Yes. Please go ahead, sir.

Yes. So there are additional new areas. So -- but then they're all related areas. So we are not going into unrelated areas. So e-mobility is part of our -- since we have been part of renewable, it is something natural to us because electricity-related only. Green infrastructure is what we have done. We have already shifted. We have almost decarbonized the balance sheet. As I said, we are now with this -- NSL also being knocked off a book. So I think my number should be -- thermal, which used to be 50% 5 years back, 3 years back, 30%, is now 8%. And by end of this quarter, my thermal assets should come down to 5% or 6% of my total book. So we have decarbonized ourselves.

And sir, just what is the average size of disbursement, what is happening on this new all -- what is your average ticket size?

See, average ticket size, again, it ranges from INR 50 crore, and it could go up to INR 200 crores.

Okay. Sir, just last question in terms of this. There was one income tax refund that was to be awarded to us. The order has already come. So have we received that or we are hitting the process of receiving that?

The fund has been received. So it -- that is, and also some interest on that payment -- INR 5 crore interest we have received.

Okay. But the major refund that still was more than 100-plus crores kind of is that happened? Is that recovered? Or is it in a process?

That is an advanced taxes because the borrowers used to make the reduction of 10% as a TDS on our account, and we got that refund. And during this financial year, we taken one step forward. The amount of that 10%, borrowers need to deduct the TDS at the rate of 1.5%. So here, that scenario will not arise in the coming years. And that will be a get advantage to us as well.

That will improve our -- to that extent, our cash flows.

Sure. So there is no major tax refund now? Or is your pending or it some big amounts pending?

Yes, there is some big amount also pending for the financial year '20, which we are expecting in this quarter or maximum by August, September.

That is of INR 100 crore, right?

Close to INR 100 crores.

Okay. Okay. Okay. And just the last thing in terms of going forward, the scenario, the way things are shaping over, as Mr. Naveenji has said, the overall disbursement target that we have for next year is upward of part of INR 7,000 crores is what he said. So do we need to then borrow money from the market? Or do some bit of -- or this will suffice? Do we need to raise money or our internal -- or this tax refund or maybe some basically the NPA recovery and all that will take care of our growth. Because currently, we are sitting on INR 1,000 crore plus cash plus some lines have been open, as you said. But now we are talking about INR 5,000 crores, INR 7,000 crores, INR 7,000 crore of disbursement target, if we achieve INR 5,000 crores also, then we're talking about 50% growth. And if we look at our balance sheet, we have a good leverage to be there for us to play out because we are currently on 4.4 debt to equity. So do we need to raise money or that will suffice even if we go at 40%, 50% capital?

See this -- what we are saying, see what happens, at an average, we will get about INR 2,000 crores of prepayments, right? Overall, additional capital which will be required will be anything from 4,500 crores to INR 5,000 when we do that disbursement, right? Now we still have our debt equity ratio, what I'm talking about, [indiscernible] total capital adequacy is also 24%. So sanction -- no, actually, a little bit of disconnect here. Sorry, I was only wondering as to why this number is coming. So just to confirm it, INR 7,000 crores is sanctioned and INR 5,000 crores disbursement.

Okay. So INR 5,000 crores minus INR 2,000 crores will be additional INR 3,000 crores.

With this kind of capital adequacy, and this should not be a challenge at all.

Next question comes from [ Sara Bhavi ] an individual investor.

I actually joined 5 minutes later. So if there is anything which you have mentioned, apologies for that. So the first thing is, can we have a quarter-wise guidance of the resolutions of stress accounts?

See, as I have told you, the -- my NPA numbers have come down substantially. And today, the net NPA amount is close to now roughly about INR [ 315 ] crores. Out of which, I said that half of it is only one account. That is the NRSS close to INR 158 crore. I said we have already got a bid there. And that bid next 2, 3 days will be put up for approval to the Board, I mean the next Board meeting, which should happen by end of this month. And so that you can see -- but then this will require regulatory approval also, CRC, because has to be the stamp on it because it's a transmission line, transmission line project. And this -- and we have got 3 bidders here, Tata Power and IndiGrid as well as Adani Power. And all 3 have a very good rate, as I said, very -- and we are hopeful of getting 80% plus of the book value, which is available now. So I said that the resolution from our side should be complete this month. And then regulatory filing and approvals. That, of course, it is for the regulator to decide, but our own expectation is that it would take roughly about 30 to 45 days from -- after our filing of the regulation with the approval -- for the approval with the regulator. So that takes care of my 50%. Meenakshi, as I said, that is roughly about another amount about INR 60 crores, INR 68 crores. That also, I said that already the resolution plan is complete. And that also will maybe end of this month, we'll file it with the NCLT. And NCLT will not take as much time. Of course, there is some bunching of cases because of COVID, some hearings have not happened. So it's accepted resolution for land by the committee of creditors. So it should get a stamp of NCLT. There also, we think that from the time we -- as I said by end of this month, we'll be filing -- by the time we file to NCLT. So 30 to 45 days is what would be a reasonable time to expect. So that takes care of INR 230 crores. Other accounts are [ TM Media ] account, INR 10 crores or INR 20 crores Athena Chhattisgarh and Mineral there. Athena Chhattisgarh is only INR 15 crore. That also in resolution plan. And by -- and it has gone for liquidation. So we hope that because against INR 190 crores, INR 15 crores is outstanding. So that much amount, at least we think that we should get a -- little more only, we should get. So by that liquidation plan is also under approval. And from the end of -- this should take 2 quarters more to get resolved. But this is a small amount. What matters is these 2 main accounts, which INR 68 crores and that constitute of approximately INR [ 160 ] crores, INR 70 crores -- roughly about INR 250 crores. So only after that, only INR 60 crores is left, which is distributed in various accounts, Athena Chhattisgarh. Mineral, again, it is with green portfolio. That also, as I said, should go the way Athena Chhattisgarh is going. That takes care of everything. And as I said, NSL Nagapatnam, we have fully provided for, but there is an offer of INR 90 crore. And subject to meeting 1 or 2 conditions compliance, we'll put up to Board. So it is not in the stress asset any longer because it has been fully provided for. But recovery, we are expecting close to whatever the bid price has been -- or the resolution, the onetime settlement offer has been given by the borrowers.

Okay. The detailed explanation, this was very helpful. One last question from my side is, sir, are there adequate infra projects available for our business growth? And how many projects on the upcoming areas like [ west ] management and e-mobility are there under construction -- under consideration?

Yes. So we have Naveenji and his colleague, [ Sitish ]. I would like to give them opportunity to address this point jointly or individually as they feel like. They're connected from their home.

No, not a problem.

We are consistently endeavoring to get more and more projects in different areas as the main thrust is on renewable area. And apart from that, as I have mentioned, this road, electric mobility, water and mining. So we are sourcing the proposal in these areas and some projects initially, they are in the pipeline. So that pipeline it is taken forward. Some of the projects, they get converted into loans. Some of the projects, rather a very few of them, we are not able to consider because of certain gaps in that. So about INR 2,500 crores worth of projects, they are existing in that pipeline. And that pipeline we are consistently increasing also slowly and slowly. Our business development team, they are sourcing more and more projects in these segments.

Next question comes from [ Abhishek Kundu ], an individual investor.

First of all, my best uses for your future endeavors. And after listening all your presentation, I find that you are in the right track, but only my concern is that there is a black spot in our history of PFS. It has been regularly paying dividend. And this time, we have skipped the dividend, which will be black spot for years to come. We cannot say that we're a regular dividend-paying company now, at least this is 1 black spot has come to the PFS. Otherwise, it was going smooth. This is -- do you agree with, sir?

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] Let me give the assurance this will be compensated.

Okay. Sir, let us hope that it will be compensated.

[Foreign Language]

Interim dividend plan [Foreign Language].

[Foreign Language]

This is one thing. So let us hope for the best. And second, my question...

Sorry to interrupt you, sir, please join back the queue for your further questions, sir. So the next question comes from [ Suyash Maheshwari from Samco Securities ].

I just had 2 questions. One with respect to what is the collection efficiency we are looking at and the growth guidance in this regard? And the other one is regarding -- if we're looking at any additional provisions apart from the onetime provision that has been made?

No, see. Provision, which we have already told you, Project Wise also best the kind of provisioning, which is likely to happen. And we told that we are expecting a credit cost around 0.30 for the next years. And we are also expecting a write-back, which should offset whatever we are talking about. What was your second question?

Sir, it was regarding collection efficiency. Like what we have phased in April, May? And any growth guidance for the company in FY '22?

Yes, growth operation already said that we'll do sanction of INR 7,000 crores and disbursement of INR 5,000 crores. So that should give you a very clear picture. That's my figure. And then on collection efficiency, Sanjay will just give you guidance.

Now with respect to the collection in this month as well, my collection efficiency is almost 90%, 95%. Only a few borrowers, which have been attended here. There is no more slippages which we are expecting in this quarter.

So next, we have a follow-up question from Mr. [ Saurabh ], an individual investor.

So as per my understanding, Mr. Naveen Kumarji is retiring this month. So would that be only one director? Or is there any succession plan from your side?

Definitely, we will -- that will be official. He's not retired. So I think that will happen. So as on date, he is in position. So to comment on that, this is -- this should be not correct. But certainly, this position will be filled, and this position will remain occupied. I cannot talk about an incumbent at this stage. So that is what I can say at this stage.

Next, we have a follow-up question from Mr. [ Abhishek Kundu ].

[Foreign Language] What about our equity assets [Foreign Language]

Sanjay, would you like to cover that?

In that, we don't have any investment. And other investments may -- we have made adequate provisioning. So we are not expecting something equity value out of those like [indiscernible] . There are 2 companies. So they are under liquidation. As an equity holder, we are not expecting anything. And that is the reason we made provisions.

[Foreign Language] If you could answer that, I will be very happy. Last November [Foreign Language] by end of November, there will be something concrete happening for PFS divestment. [Foreign Language]

As Pawan, sir, already told, it will be the -- it's best to ask this from a holding company, PTC. They have insight we don't have in that.

[Foreign Language] Why are somebody else discussing the investor than you?

[Foreign Language] It's up to your wish how you want to retain my shares. I can't force to retain my shares or I can't force you to buy my shares.

No, no, you're -- that's true. But from your perspective also, when you were employee of some company, you should also know what is the status of the company, which is going to which hands?

So once something concrete will come, it will be updated to all these stakeholders.

[Foreign Language]

It's my polite request because that is the process being run by the holding company. So we are not aware about the insight of all those things.

That was the last question for the day. Now I hand over the floor to Mr. Karan (sic) [ Nikunj Seth ] for closing comments.

Yes, on behalf of S-Ancial Technologies, I thank every participant for joining this call. I thank to each and every management for such detailed answers. I would now like to hand over the call to Dr. Pawan Singh for his closing remarks.

So thank you very much, and it was very nice to interact with you, and it is -- we always look forward to the feedback, which -- on the basis of which we can take mid-course or whatever action we have to take. And I'm so glad that very honest and clear feedback we got from the market. And we also got opportunity to present our thought process and clarify our points. And I appreciate that everybody gave us a very patient listening and hearing and also appreciate the fact that almost everybody, in fact, by and large, everybody was very, very appreciative of the effort which we are making. It is always very good to -- because all this requires -- it looks -- all this looks very easy, but in difficult types of economy and preceding NBFC crisis, we are in a -- we have made a lot of efforts. And when we hear good words from the market, it is always encouraging, so that we are able to take further action and do even still better than what we are doing. So thank you very much. And as I have said that at the beginning, I'll reiterate my opening remarks with the closing remarks that all this while we are saying that we are reaching towards the end of the tunnel, but I think we are now out of the tunnel, which the impact we'll see in the coming quarters as we see. And to all investors and people who represent the investor community, really appreciate that you have stood with us in a difficult time. And I'm sure different flowers bloom at different time. It was a quotation of -- I think the Chinese revolutionary Mao Tse-tung, different flowers bloom at different point of time. And probably, our time has come to bloom now. And the benefit of that, you should get. So thank you very much. Thank you so much. And please remain safe. And I hope your families are safe and taken care of. Thank you so much.

Thank you, everyone. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using conference call service. You may disconnect your lines now. Thank you, and have a pleasant evening.