 "CRISIL downgrades rating on PTC Fin Services' non-convertible debentures")
The rating agency, CRISIL Ratings, has downgraded the rating on PTC India Financial Services Ltd’s (PFS) long-term bank facilities and non-convertible debentures from “A+” to “A”. The action reflects the continued delay in incremental fundraising, which led to PFS limiting its lending activity and operations. The outlook on these instruments remains "negative".
The Delhi-based finance company did not make any substantial disbursements during May-September 2023 due to a lack of fresh funding. Challenges in raising funds are primarily attributable to corporate governance concerns raised earlier by independent directors, CRISIL said in a statement.
Incremental fundraising has been limited to Rs 300 crore since January 2022 and hence, disbursements have been funded mainly through repayments and prepayments.
Overall disbursements for FY23 stood at Rs 2,253 crore against sanctions of Rs 3,854 crore (Rs 3,888 crore and Rs 4,150 crore, respectively, for FY22). Disbursements for the Q1FY24 stood at Rs 332 crore and fell to Rs 78 crore during Q2FY24.
The rating agency reaffirmed the rating on the company's short-term bank facilities and commercial paper programme at “A1”.
In a bid to address concerns, the company has taken several steps. Firstly, the company focused on strengthening the senior management. Over the period till June 2023, the company appointed an executive director (Credit), a head for Internal Audit, and a head for Human Resources amongst others.
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It has also appointed an executive director (Project Monitoring, Disbursement and Recovery) and a chief compliance officer in October 2023. CRISIL Ratings also understands that the appointment of a regular MD and CEO is in advanced stages of completion.
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In June 2023, its then Managing Director & CEO Pawan Singh, proceeded on leave following the direction of the Reserve Bank of India (RBI).
Secondly, the company has continued to focus on collections – especially on the resolution of delinquent accounts (classified as gross stage 2 and stage 3) – and maintain high liquidity levels.
Lastly, the company has continued its engagement with existing and new lenders to address any concerns and resume resource mobilisation, CRISIL added.
Its gross loan book declined by 15.6 per cent and stood at Rs 7,339 crore at the end of March 2023 from Rs 8,686 crore as of March 31, 2022. They further declined to Rs 7,175 crore in 1H FY24.
The loan book may further decline in this fiscal in light of the stoppage of disbursements unless the company is able to mobilise fresh funding from lenders, it added.