Mumbai: Union government-owned non-banking financial company (NBFC) Power Finance Corp. Ltd (PFC) has urged the central bank to reclassify it as an infrastructure finance company (IFC) so it can lend more to private sector power firms, chairman and managing director Satnam Singh said.
PFC, a navratna status company with more financial and administrative autonomy than most other public sector firms, will also petition the Reserve Bank of India (RBI) later this week to borrow $1 billion (Rs4,450 crore) in 2010 through external commercial borrowings.
“If we change to an IFC, we will be able to increase our private sector single and group exposure lending limit by 5% each,” Singh said on Tuesday after announcing the firm’s annual results.
In February, RBI had allowed NBFCs with 75% of their total assets in infrastructure and net owned funds of Rs300 crore or above to turn into IFCs.
PFC can now lend 28% of its net worth of Rs12,600 crore to a single private company and 35% to a group. “But with private companies involved in 63% of the power projects in the 12th Plan, we would like to increase this limit,” Singh said.
As high demand for loans would put a strain on its capital adequacy ratio, PFC plans to raise funds from the equity market as well.
“We have a Rs30,000 crore disbursement target for this year, which will use 2.5% of our capital adequacy. In a year’s time, we will have to raise equity capital,” Singh said.
PFC will also borrow Rs27,700 crore from the domestic debt market, said R. Nagarajan, director (finance and financial operations).
In the fourth quarter, the company’s net profit declined 40% from over a year ago to Rs598 crore. Revenue dropped to Rs1,819.70 crore, from Rs2,104.70 crore earlier.
PFC is also looking at lending to Nepal’s hydropower sector, which has a capacity of 80,000MW.
“We are also looking at helping clients identify opportunities for mergers and acquisitions in the power sector because we have minute details of projects in the country,” Singh said. “Power projects take a long time to build and if some companies want to acquire some smaller projects, we can help.”
On Tuesday, PFC shares fell 1.64% to end at Rs276.15 on the Bombay Stock Exchange, while the benchmark Sensex index lost 0.31% to close at 17,690.62 points.