On KSK Mahanadi — the lenders are going to get 26% equity stake. What is the share of PFC's equity stake, and what is the value you're going to realize, and the timeline for that realization of equity stake in the project?
It will be too early to say anything in this regard. Lenders in total are going to get 26%, and proportionate to last year, we will also be getting. But initially, I don't think that it will be valued at any substantial amount. It will be at a negligible amount as far as RBI guidelines for accounting of the same. And in future, it's very difficult to predict the valuation as on date. Yes, we have around 12%.
Can you provide color on yields in backdrop of 2-3 loans — BEML last quarter on infra, ACME Renewables. What is the range of yields looking like? How are yields shaping up going forward given competitive intensity? Second — you are maintaining full year growth at 14% similar to FY'24, but to achieve that next quarter you should grow at 9%. For that repayments also have to be substantially lower in Q4, but historically Q4 is heavier on repayments. What are the levers?
BEML, we have not sanctioned any loan. It was an MoU which we have entered into with BEML, so there was no sanctions. For the renewable, our interest rates are starting from at around 9% and going forward. We are seeing slightly mix disbursement or our loan book mix is being changed. From conventional generation we are moving to renewable as well as higher outstanding on distribution sector. But still, we are able to maintain our yield and spread. On growth front — in Q3 we have grown on a 10% basis year-on-year, which is better than last year. Generally, our disbursements are more happening in the Q4 — from past trend, 37% of our total disbursement is happening in the Q4. So on that basis we will be able to maintain our guidance. On repayments — on an average around INR24,000 crores to INR25,000 crores of repayment we receive on a quarterly basis. However, this quarter, it is somewhere around INR18,000 crores to INR19,000 crores. So we will be able to maintain the target.
On unhedged forex exposure — you are saying given current exposure, we will lose around INR45 crores for every INR1 of unhedged depreciation, so this has been around INR1 in this quarter. So as things stand now, it would be a INR45 crore hit to P&L. Is that right? And for FY '26 given current disbursement mix, do we expect to maintain NIMs as it is, or see decrease given renewables gathering momentum?
The question was specifically with respect to the unhedged portfolio. So unhedged portfolio for each INR1, considering our loan book of $9 billion, it is going to have an impact of INR45 crores. But there are certain other things that has an impact — as the net impact on the profitability is change in the exchange rate less the mark-to-market valuation. Mark-to-market valuation when we go for the hedged portfolio depends on lot many things — forward premiums, exchange rate, current exchange rate and the protection. On NIM — when we talk of the renewable, our spreads are slightly lower. But as the profit increases and loan growth continues at the same pace, we are expecting that NIM will be revolving in the similar range. However, in quarters with accelerated loan growth, there could be some impact on the NIM.
REC in its concall had given a number — basically these resolutions in advanced phases, they were expecting around INR2,200 crores of recoveries net of provisions. What would be the figure in your case for advanced cases — how much net recovery or net addition to P&L from advanced projects?
The main is under KSK where we have provided for around 55%. As per the current resolution plan submitted to NCLT, we are expecting to recover more than 100%. So there may be reversals. Similarly on Shiga, we may have 100% recovery. Right now I don't think that we should discuss any absolute amount because let all those things let come to a final conclusion, only then we will be able to share the absolute amount.
Based on exchange rate movement, this quarter rupee appreciated and there's only a INR1 difference. You have to start explaining better not only in terms of foreign exchange, in terms of non-performing assets, recoveries. You have to talk to the government — say this is for energy security of the country. Projects are stuck in NCLT. Why is there no coordinated effort with power ministry, finance ministry, law ministry? And why are you not able to tell us recovery amounts when newspapers are telling us? You owe it to the public, the President of India has invested 52% in you. Why are you not reporting stuff properly?
I don't know that from where have you gathered that we are not disclosing the numbers. I think you have some misunderstanding about the thing. You might not have heard it properly. What we said that these are the resolutions we are targeting in this quarter. So we have never said that Sinnar is not there or any other project is not there. What we were talking, you have to listen it properly that this is only that these resolutions we are looking at in the current quarter. And we have clearly told you that we have 55% provisioning in KSK. We have been sharing the number of provisioning for other assets on one-to-one basis also and in the falls also. So this is what we said that exact number, what is there, we have said that we are expected to receive more than 100%. So I don't know from where this disconnect is coming.
Is there any expense or forex currency translation loss that we can expect from the hedged book as well — like do our hedges only protect us up to a certain level of currency depreciation? Or is it covered no matter where the currency goes? Theoretically if rupee goes to INR90, what kind of total losses on hedged and unhedged combined? And would REC be similar like in their hedging strategies?
Yes, it's a mix. We have taken some cost-effective instruments also for the hedging, where we have an upper cap of the protection. In that case, it all depends on the closing rate of exchange about the protection. It's very theoretical and we have to see that in each individual case up to what level is the protection involved. But on a broad figure, if rupee is ranging somewhere around INR88, so we may have around additional maybe INR400 crores to INR500 crores of impact, which is going to be there on the P&L. I'm sorry, I don't have any figures for the REC in this regard.
We haven't shared the sanctions number in the presentation. If you can give color on sanctions trend. Also exposure on electricity board not in presentation. And question on rating upgrades — would that lead to provision release in Q4?
On sanctions for the year, we have sanctioned INR252,662 crores, of which INR93,000 crores was during the current quarter. If we bifurcate INR252,000 crores, around 62% is towards generation including renewable and conventional, around 16% is towards distribution, around 7% in transmission and around 9% in infrastructure. On the rating upgrade about state utilities DISCOMs — we will be completing the rating exercise for FY '24 soon, and maybe in another 10, 15 days we will come out with that exercise. On rating upgrade write-back possibility — the integrated rating when it comes only then we will be able to know what is their rating and what is the likely impact because it varies with each individual utility.
First on NPA — the marginal increase in waste-to-energy account. What is the total exposure in this account? Any qualitative color on technological issues or other players seeing similar issues? Second on repayments — have we seen any balance transfers to banks or other peers? Repayment rates have been pretty high.
On the NPA account, the total exposure is only INR130 crores. It's unique to that project. We are not seeing any other project, which is going to be impacted by this type of issues. Taken together, all the 3 projects, INR130 crores is the total exposure. On the prepayment thing — I think this is in the normal course of business. It's a common risk in the financing sector. This financial year, we have in total of around INR13,000 crores of prepayments during the current 9 months. INR130 crore is out of INR500,000 crores. There are more accounts, I don't have that breakup right now.
On growth front — if I look at growth drivers (conventional generation, renewables, loan to state utilities, non-power infra) — renewables and non-power infra seem fine on small base, but challenge is on conventional generation and state utilities. There is noise on renewables PPA getting stuck. For Q4 and FY26, can you provide guidance on growth in these four drivers — pickup in conventional in FY26, how renewables and state utilities are panning out (particularly state utilities given RDSS progress slower than expected)? When do you see RDSS-related disbursement pick up? And on NPA — can you quantify recoveries and resolutions this quarter that resulted in write-back, and how do you see write-back panning out in Q4 and FY26?
Let me talk first on the growth front. You said that there has been some PPA in the renewable front which has not been entered into and there is a capacity which is not supported by the PPA. Let me assure you that we have not funded any such asset. During the current quarter, our disbursements are primarily on the renewable front and the other is on the distribution side. The disbursement, renewable, we have disbursed around INR6,000 crores. Out of the total, 28% disbursement on the generation side — the balance 63% is on the renewable and 37% is on the conventional side. Distribution still accounts for the major disbursement during the quarter at around 60% and the transmission and infrastructure at 7% and 4%. Going forward in the next quarter, we are looking majorly on the distribution side and followed by generation. We have in pipeline good disbursement planned out for the current quarter. On RDSS slowdown — during the initial phase of RDSS scheme, the scheme was being conceptualized. There were a lot of modalities. But now since most of the sanctions have already been done, and 94% of the sanctioned work under reduction and 90% of the works under smart metering has already been awarded, we are expecting that now onwards, it's going to pick up for the disbursement as the execution is going to happen. On the NPA front — this quarter, we don't have any upgradation of any of the NPA asset. KSK we have filed final resolution plan in January 2025 in NCLT; Shiga and TRN is in advanced stage. For Shiga and TRN, we will be able to conclude in this financial year. For KSK since now the plan has been submitted to NCLT, once we receive approval, then we will be able to implement it.
So you expect AUM growth of about 12%, 13% for this year and next?
Yes. For the current financial year, we are expecting that we will be able to maintain the similar level as was done in the previous year.
Regarding foreign currency borrowings — 95% of the book is hedged, so something around INR4,000 crores will be unhedged. What will be the rough provision we're going to make on the INR4,000 crores in Q4 based on the current rupee value?
See the current rupee value, as on 31st of December, dollar closed at INR85.62, and now it is at around INR86.5. So if you take INR 1, so unhedged portion — if it is at INR1, out of $9 billion, $900 million is unhedged, so you can work out maybe around INR90 crores. It will be around INR90 crores for each INR1 for depreciation in rupee. If at any what I have worked out is 10%. So it will be INR45 crores. It is for each depreciation in rupee.
First on the transmission book — your repayments over there were elevated this quarter, any color? Would the repayments in fourth quarter be substantially lower because that could be one of the ways of managing to achieve 13%, 14% loan growth? Second on gross Stage 3 — slight increase between 2Q and 3Q (INR133bn to INR135bn), any color on that?
On transmission loan book reduction, there is some reduction which is in the normal course of business — the repayments which we are getting on a regular basis. And there is one loan which has been prepaid also in case of transmission. On the slight increase in Stage 3 asset — there has been one promoter for the waste-to-energy project. So that has slipped in the Stage 3, and it has a small amount of around INR130 crores, which has been categorized as stage 3 assets.
And the slipped asset — is this from biomass waste energy project?
No, no. It's a waste-to-energy project. There are some technological issues in the project, which is how we have seen that the slippage into the Stage 3 account.
One of your peers indicated that disbursal on RDSS loss reduction plan has started. Have we started disbursals on the RDSS loss reduction bit?
We have till now under RDSS cumulatively disbursed around INR2,500 crores. And during the current quarter maybe around INR600 crores was the disbursement amount.
Just a follow-up to Shreya's question — that slippages, one project slipping into NPA. Was it 1 project or 3 projects because the number of outside NCLT cases has increased by 3 this quarter versus last quarter?
It was 1 promoter, 3 projects.
Which product segment particularly in Q4 is going to aid this kind of 9% and 14% growth?
See, we have done around INR252,000 crores sanctions during FY '24-'25, so this is nearly 62% for generation projects. So we are expecting that both on the generation as well as on the distribution front, we will be working during FY the last quarter.
Firstly, news article about delay in PSA signing between SECI and certain DISCOMs leading to overall renewable disbursements being slower — are we seeing something of that on the ground? In context, what will be our undisbursed portion of sanctioned loan book in renewable? Secondly, in terms of REPO rate change, is there any portion of our liability or asset which gets repriced in the near term?
What you are saying, we also have read in the newspaper, but we are not seeing right now in PFC any slowdown in the renewable disbursement. During the financial year, we have sanctioned around INR90,000 crores towards the renewable generation — around 50% during the current quarter itself. On disbursement, INR6,000 crores during the current quarter and INR16,000 crores during the financial year. So compared with previous year, it's more or less in line. So we are not seeing any stress on that. On REPO rate change — around INR25,000 crores of our borrowing is linked to the REPO rate. Timing may be reset on a monthly or on a quarterly basis. Yes, it's only on the liability side.