Speaking to CNBC-TV18's Ekta Batra, IFCI CEO and MD Malay Mukherjee said the rise in NPA levels has been due to a particular account, related to a gas project, which has added Rs 800 crore to the NPA figure.
IFCI has a total exposure worth Rs 1300 crore to gas-based projects. The company expects both GNPA and NNPA to come down sequentially. Mukherjee is confident of a minimum 2 percent decrease in GNPAs by the next financial year.
The company has also restructured two accounts worth Rs 160 crore during the quarter.
Below is the interview of Malay Mukherjee, MD & CEO, IFCI, with CNBC-TV18's Ekta Batra.
Ekta: I wanted to start with the asset quality this quarter because the gross non-performing asset (NPA) has worsened to 17.3 percent versus 16.2 percent on a sequential basis. Can you just take us through the asset quality stress that the company faced this quarter?
A: If you look at the gross NPA quarter sequentially it came 17.3 percent but if you look at year wise it has come down from 22.2 percent to 17.3 percent. Of course there is some sort of a concern for the NPA not only for us, but also for the entire financial market.
But, for me what has happened is one particular account of infrastructure and power sector and that too related to the gas projects where we have a large exposure. As prudentially, we have taken a call to make a provision in this quarter itself. So, but for that the gross NPA and net NPA figure would have been better sequentially basis and year- wise basis.
Ekta: Can you just give us the total slippages this quarter and how much this gas space, power plant that slipped this quarter was?
A: Well, I would like to go on a year-wise basis that will give you a much better figure. So, if you look at the numbers, the gross NPA is now at Rs 3,451 crore which is 17.26 percent and net NPA is Rs 2123 crore which is 11.4 percent. So the gas-based project has added Rs 800 crore to the NPA figure.
Ekta: What were your recoveries this quarter? Did you manage any recoveries at all and how do you expect this particular account to move going forward?
A: As far as this account is concerned, prudentially we have made a provision there. There's nothing wrong with this account. It is waiting for the gas connection. This is a project of 500 megawatt consisting of two phases. Unit is ready for the production and if they get the gas connection this will start operations.
So, the moment it starts it will be in a position to clear the overdues and the account will become automatically standard. So, it is a forced measure you can say because of this the account we thought a provision can be made in this quarter itself.
Ekta: Can you name the account?
A: No, I am sorry. It's not fair to name the account.
Ekta: What is the exposure to the sector? Going forward how much more slippages can be seen within?
A: In gas-based projects we have exposure of nearly Rs 1300 crore.
Ekta: So, this would include Rs 800 crore?
A: Yes of course.
Ekta: So, what is your expectation in terms of asset quality going forward?
A: In general we are planning on quarter-on-quarter basis this gross NPA, net NPA both to go down and we are expecting at least 2 percent will go down by the next financial year. And if you look at the net NPA. My NPA book is 50 percent of the total NPA. The sub-standard category is 50 percent of the total NPA of the book. And in the sub-standard since the provisions are 10 percent, you are seeing the net NPA figure very high. So, the moment we make a higher provision when quarter-on-quarter basis this net NPA figure will also come down. So not only we will recover the money, we will make more provisions so that the net NPA figure comes down further.
Ekta: What about your restructured book? Can you just tell us how many loans you have restructured in the quarter?
A: We have restructured two accounts in this quarter worth Rs 160 crore.
Ekta: And what is your pipeline for restructuring?
A: The pipeline as such is around Rs 150 crore. We are expecting that, including the gas project what you were talking just now another one. So, Rs 160 crore we have restructured this quarter. Company as a whole has a restructured book of Rs 1100 crore out of which last quarter we did Rs 160 crore. Pipeline is roughly around Rs 150-160 crore for this quarter.
Ekta: And a run rate of slippages going forward would be how much?
A: No, I don't want further slippages to come in. I would like to get it reduced. I would like the recovery more than the slippages happening.
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