 "IDFC's balance sheet to stay flat in FY15")
Infrastructure Development Finance Corporation (IDFC), transitioning into a bank, said its balance sheet might stay flat in the current financial year, as business environment for infrastructure projects remains challenging.
Sunil Kakar, the group’s chief financial officer, said the infrastructure finance company, which got licence from the Reserve Bank of India (RBI) in early April to start a bank, was planning to build a portfolio of high-quality assets with low risks.
The company is not going to grow its balance sheet, given the challenging environment for the infrastructure sector, such as bottlenecks in fuel supplies for energy units. Plus, the work on the bank was underway. “Therefore, expanding the balance sheet is not a priority,” he said.
IDFC’s stock closed flat at Rs 114.5 a share on the BSE on Monday. On Friday, it had closed lower by 2.23 per cent at Rs 114.1.
The company’s balance sheet expanded six per cent in 2014-15 to Rs 75,163 crore from Rs 71,059 crore at the end of March, 2013. Gross loan approvals were down one per cent from Rs 25,976 crore in FY13 to Rs 25,683 crore in FY14. Also, disbursements made in FY14 were also down eight per cent from Rs 17,695 crore in FY13 to Rs 16,296 crore in FY14.
Referring to the outlook for lending to infrastructure projects, Kakar said the worst was not behind. IDFC is still in the infrastructure space and not yet a bank. It will take a while before things could become better.
IDFC’s provision bill for stressed assets, including restructured loans and investments, went up sharply to Rs 483 crore for the March quarter from Rs 164 crore in a same quarter in 2012-13. It made a dent in the bottom line. Its net profit for the fourth quarter ended March 2014 dipped by 51 per cent year-on-year to Rs 258 crore.
Problems in finalising fuel (coal and gas) supply links have hit power projects. Road projects are also facing problems for want of clearances. The net effect has been project delays and stressed loans.
Asked about the way IDFC was dealing with restructured accounts, the chief financial officer said the projects (like power projects) were viable and facing problems in getting fuel. The restructured loan book was Rs 2,600-2,700 crore at March-end, 2014.
While IDFC was supporting companies, in some cases it was also working with promoters for the sale of some assets and raise cash for projects, Kakar said.
The intensity of working with restructured loans has gone up in the last two quarters.
IDFC has adequate securities as cover for its loan exposures. “Selling these securities is not a solution at the present juncture for recovery. We are sensitive to situation and understand the need to provide support,” CFO said. The decisive government at centre might change things for the better in 12-18 months for infrastructure sector, he said.
The lender is already in “mission mode” to launch banking operations from October, 2015.
Kakar said IDFC was going to focus on reworking of structure to become RBI norms’ compliant, hiring people, development of systems and technology backbone.
It plans to open 200 branches between October, 2015 and March, 2017. Most of them would be in semi-urban and rural areas, he said.
Sunil Kakar, the group’s chief financial officer, said the infrastructure finance company, which got licence from the Reserve Bank of India (RBI) in early April to start a bank, was planning to build a portfolio of high-quality assets with low risks.
The company is not going to grow its balance sheet, given the challenging environment for the infrastructure sector, such as bottlenecks in fuel supplies for energy units. Plus, the work on the bank was underway. “Therefore, expanding the balance sheet is not a priority,” he said.
IDFC’s stock closed flat at Rs 114.5 a share on the BSE on Monday. On Friday, it had closed lower by 2.23 per cent at Rs 114.1.
The company’s balance sheet expanded six per cent in 2014-15 to Rs 75,163 crore from Rs 71,059 crore at the end of March, 2013. Gross loan approvals were down one per cent from Rs 25,976 crore in FY13 to Rs 25,683 crore in FY14. Also, disbursements made in FY14 were also down eight per cent from Rs 17,695 crore in FY13 to Rs 16,296 crore in FY14.
Referring to the outlook for lending to infrastructure projects, Kakar said the worst was not behind. IDFC is still in the infrastructure space and not yet a bank. It will take a while before things could become better.
IDFC’s provision bill for stressed assets, including restructured loans and investments, went up sharply to Rs 483 crore for the March quarter from Rs 164 crore in a same quarter in 2012-13. It made a dent in the bottom line. Its net profit for the fourth quarter ended March 2014 dipped by 51 per cent year-on-year to Rs 258 crore.
Problems in finalising fuel (coal and gas) supply links have hit power projects. Road projects are also facing problems for want of clearances. The net effect has been project delays and stressed loans.
Asked about the way IDFC was dealing with restructured accounts, the chief financial officer said the projects (like power projects) were viable and facing problems in getting fuel. The restructured loan book was Rs 2,600-2,700 crore at March-end, 2014.
While IDFC was supporting companies, in some cases it was also working with promoters for the sale of some assets and raise cash for projects, Kakar said.
The intensity of working with restructured loans has gone up in the last two quarters.
IDFC has adequate securities as cover for its loan exposures. “Selling these securities is not a solution at the present juncture for recovery. We are sensitive to situation and understand the need to provide support,” CFO said. The decisive government at centre might change things for the better in 12-18 months for infrastructure sector, he said.
The lender is already in “mission mode” to launch banking operations from October, 2015.
Kakar said IDFC was going to focus on reworking of structure to become RBI norms’ compliant, hiring people, development of systems and technology backbone.
It plans to open 200 branches between October, 2015 and March, 2017. Most of them would be in semi-urban and rural areas, he said.