PFC Expects Gross NPAs To Fall Below 3% After Resolution Of Stressed Projects

The Lanco Amarkantak Thermal Project and Shiga Energy Pvt. are in an advanced stage of resolution.

<div class="paragraphs"><p>Power lines. (Source: evening_tao on Freepik)</p></div>
Power lines. (Source: evening_tao on Freepik)

Power Finance Corp. expects its gross non-performing assets to fall below 3% after the resolution of two projects, which are in an advanced stage of resolution.

Out of 21 stressed projects, with a total outstanding amount of Rs 16,000 crore, two projects—Lanco Amarkantak Thermal Project and Shiga Energy Pvt., part of Dans Group—are in the advanced stage of resolution, Parminder Chopra, chairman and managing director of PFC, told NDTV Profit.

The two projects have an outstanding debt of Rs 2,900 crore and comprise 18% of the total NPA book, she said.

PFC submitted a resolution plan for the 1,920 MW Lanco Amarkantak thermal project in March and has made a provision of 76%. “We expect over 35% principal recovery post-resolution of the project."

However, for the Shiga Energy hydro project, the company has made a provisioning of 31% but expects 100% principal recovery, Chopra said. The matter is getting resolved outside the National Company Law Tribunal, she said.

“Post the resolution of these two projects, we expect our gross NPA to fall below 3% from 3.34% as of March 31, 2024,” she added.

Other Projects

The company also expects a couple of other projects to be resolved in FY25, including the 1,800 MW KSK Mahanadi Power project.

The net NPA for the power finance major has dropped to 0.85% as of March 31, from 1.07% a year ago. In the last five years, its non-performing assets have fallen by around 50%.

PFC’s NPAs comprise 21 projects, with a total outstanding of Rs 16,000 crore. While 13 projects worth around Rs 14,000 crore are being resolved under NCLT, seven projects valued at Rs 2,600 crore are under liquidation. The remaining eight projects valued at Rs 2,200 crore are being resolved outside of NCLT.

Shares of PFC closed 3.56% higher on Wednesday, as compared with a 0.16% drop in the benchmark Sensex.

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