PFS sanctions Rs 7.16 bn to 4 power projects…

• PFS has sanctioned financial assistance aggregating to RS 7.16 billion to 4 power projects in the current quarter taking the aggregate amount of loan sanctions to Rs 22.55 billion till date in FY12. This exceeds the aggregate amount sanctioned during the entire FY11 which was Rs 16.58 billion. Similar growth momentum has also been maintained in different key parameters of the company. The gross revenue rec orded in H1 FY12 was Rs 970.7 million, which is 89% of the gross revenue recorded in the entire FY11.

• Similarly, interest income on debt recorded in H1 FY11 was Rs 540.9 million which is 73% of the interest income on debt in entire FY11. Profit before tax (PBT) and profit after tax (PAT) during H1 FY12 records growth of 36% and 29% respectively over the corresponding figures of H1 FY11 despite foreign exchange translation loss on ECBs and mark to market loss on outstanding derivative contracts undertaken for hedging of ECBs amounting to Rs 43.6 million during H1 FY12.

• These are not the actual losses as the ECB drawls are for long term tenure of 12 years with 3 years moratorium for principal repayment. However, the provision, though not actual loss, was required to be provided for in terms of accounting standards applicable in India. If adjusted for the same, PAT for H1 FY12 would have been Rs 358.2 million which is 97% of PAT for the entire FY11. It may be mentioned that post Q2, on October 05, 2011, the company has concluded sale of investment pursuant to a ``Put Option`` exercised by the company during the current quarter. In accordance with the applicable accounting standards, gain of Rs 476.1 million arising on this transaction would be recognized in the subsequent quarter i.e. Q3.

• Another development subsequent to Q2 FY12 is that the company has executed necessary agreements for divesting its part stake in Indian Energy Exchange (IEX). Application for FIPB approval is being made. It may be mentioned that during FY11, PFS divested 4.88% stake in IEX at Rs 115.41 a share which was subscribed by PFS at face value of Rs 10 a share. PFS has loan pipeline of projects both for long term and mezzanine funding, which offers potential for additional sanction of more than Rs 40 billion. The effective undisbursed debt sanction as at the end of H1 FY12 was Rs 31.02 billi on. Increase in exposure norms on PFS becoming IFC, and increase in net worth on capital raising through IPO in March 2011, has increased the lending business of PFS significantly.

• The outstanding debt amounting to Rs 9.91 billion as at the end of H1 FY12 recorded increase of 63% over the outstanding debt as at the end of H1 FY11. Normally, the pace of disbursement is more in the later part of the financial year. PFS` portfolio of projects includes IPPs, and PFS has no exposure to distribution companies. There are NIL NPAs as on date. There is increasing number of proposals for mezzanine/short-term funding and for renewable projects, which may result in to quicker disbursement. The growth in the business of PFS is despite the stricter due diligence process followed for appraising the projects under prevailing risk environment for the power projects.

• Because of the low-cost resources available and ability to pass-through i ncreased interest cost, the Net Interest Margin (NIM) stands at 6.57% for Q2 FY12 and spread at 3.88%. Net Interest Income considered for NIM does not include interest income of Rs 54 million earned on treasury float on temporary surplus funds. NIM and Spread for Q1 FY12 were 4.97% and 3.03% respectively. The average cost of borrowings in Q2 FY12 has reduced to 10.22% from 10.50% in Q1 FY12.