Rs 4,000-crore investments in wind energy on brink of becoming NPAs

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“All these developers face this threat, even if they have been paying interest on their loans. This will affect their credit worthiness for future bank loans.”

Investment of Rs 4,000 crore in wind energy projects is on the verge of becoming non-performing assets, as over 550 MW of projects that are ready to generate electricity are stranded because a state utility has refused to sign power purchase agreements (PPA) or issue commissioning certificates.

 

Projects of Tata Power, ITC, Jindal Steel subsidiary Maharashtra Seamless, Hero Future Energies, Green Infra Wind Energy and Continuum Wind Energy are facing the risk. “Wind energy projects, which do not start generating power within two years of taking loans can be declared ‘non-performing’ by the RBI,” said Sunil Jain, President, Wind Independent Power Producers Association. “All these developers face this threat, even if they have been paying interest on their loans. This will affect their credit worthiness for future bank loans.”

Project developers are waiting for action from the Maharashtra State Electricity Distribution Co Ltd (MSEDCL), which has refused to sign PPAs or issue commissioning certificates.

Jain said 364.15 MW of wind projects were ready in 2014-15 and another 192.05 MW were completed in 2015-16.

The distribution company defended its position. “We are working in accordance with the state’s new renewable energy policy,” said MSEDCL Chairman Sanjeev Kumar, unwilling to go into details. The Maharashtra Energy Development Agency (MEDA), which handles nonconventional energy in the state, did not respond to queries.

Maharashtra released a new renewable energy policy in July last year, which said “a total of 5,000 MW capacity of wind energy projects shall be commissioned. Out of that, an initial 1,500 MW will be used to fulfill RPO (renewable purchase obligations) of distribution companies, and the rest, 3,500 MW capacity of wind projects, can be utilised as open access for inter-state/ intra-state open access/captive consumption/REC (renewable energy certificates), etc.”

MSEDCL, however, has conveyed to developers that the 1,500 MW of installed capacity from which it will accept wind power, will be from 2011 and not from the time of release of the new policy. Between 2011 and July 2015, when the new policy was unveiled, MSEDCL had already signed PPAs for around 1,000 MW of wind power, which meant it would accept only 500 MW more.

In practice, it has not done even that, developers said. “Not a single PPA with a wind energy producer has been signed since the new policy came out,” said Jain. “Besides, it is absurd to apply a policy retrospectively. We have projects ready to start generating at the press of a button, but we are not being allowed to do so.”

As of December 2014, Maharashtra had 3052.7 MW of installed wind capacity.

“We have complained to the Maharashtra chief minister, the Prime Minister’s Office, the finance ministry and the Ministry of New and Renewable Energy,” said Jain. “Every investor and developer in wind energy in Maharashtra is suffering.”
Source: http://economictimes.indiatimes.com/articleshow/51576997.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Willful defaults a third of Punjab National Bank NPAs

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Of Rs 10,869 crore, top 10 defaulters together owe the bank Rs 3,554 crore

Close to a third of Punjab National Bank’s gross non-performing assets (NPAs) of Rs 34,338 crore have resulted from willful defaults, the lender has said. Of this amount of Rs 10,869 crore, the top 10 willful defaulters together owe the New Delhi-headquartered bank Rs 3,554 crore.

As at the end December last year, PNB had identified 904 companies as being willful defaulters and filed cases against some of them. The number at the end of September 2015 was 764 companies and the value of unpaid loans then was Rs 9,204 crore.

Following a speedy clean-up of its portfolio in the wake of a directive from the Reserve Bank of India (RBI), PNB reported slippages of Rs 17,655 crore in Q3FY16 and a pre-tax loss of Rs 858 crore. The slippages left the public sector bank’s impaired loans at 17.4%, comprising 8.5% gross NPAs and 8.9% standard restructured loans.

PNB has made loan loss provisions of Rs 18,758 crore in the three years 2012-13, 2013-14 and 2014-15.

In the current year provisions are expected to be of the order of Rs 9,800 crore; in the nine months to December the amount provided was Rs 7,089 crore. Between FY11 and FY15, the government infused Rs 3,457 crore of capital.

The PNB stock’s market value has been eroded by approximately Rs 12,000 crore since the start of September. The stock closed at Rs 75.65 on the BSE on Monday, down 0.66% over Friday’s close. The stock is trading at a price to book value (P/BV) of 0.29 times for estimated FY17 book value.

PNB’s top 10 wilful defaulters include names like Winsome Diamonds & Jewellery (Rs 900.37 crore), Forever Precious Jewellery & Diamonds, Zoom Developers (Rs 747.98 crore), National Agricultural Cooperative Marketing Federation of India or Nafed (Rs 224.26 crore) and S Kumar Nationwide (Rs 146.82 crore). While the bank did not comment on the classification of these exposures, all the accounts are understood to have been classified as NPAs and provided for.

Last year in June, the Enforcement Directorate (ED) had attached 1,280 acres of Zoom Developers’ land in the US worth Rs 1,000 crore. According to reports, Zoom has allegedly diverted funds borrowed from banks to 350-odd subsidiaries, related parties based in India and abroad, and to purchase jewellery for the wife of its promoter, Vijay Chaudhary. In a separate case, several PNB board members were questioned about loans to Winsome Diamonds and its subsidiaries.

Interestingly, the list as on December 31, 2015, does not include Kingfisher Airlines, which PNB recently said has been declared willful defaulter. “The company is in consultation with its legal counsels to challenge the decision by taking appropriate legal action that may be required in this regard,” UB (Holdings) had said in a stock exchange filing.

According to RBI guidelines, a borrower is termed a willful defaulter if he has defaulted in meeting the repayment obligations to the lender even when he has the capacity to repay, or has not utilised the money from the lender for the specific purposes for which finance was availed and has diverted the funds for other purposes.

KC Chakrabarty was chairman and MD of the bank between 2007 and 2009 and KR Kamath was CMD between 2009 and 2014.

Source: http://www.financialexpress.com/article/economy/wilful-defaults-a-third-of-pnb-npas/214853/