IDFC sees slowing of disbursements

Country’s largest infrastructure lender IDFC has said that disbursements slowed down during the first quarter of the present fiscal when compared to the same quarter last year due to the delay in implementing infrastructure projects, especially by the power and road sector.

The company also said it is waiting for the government to expand definition of Infrastructure, which would help the company diversify into new areas, including lending to aircraft, ships purchases and education.

Speaking on the sidelines of IDFC’s AGM at Chennai, Deepak S Parekh, chair-man, IDFC, said “first quarter of last year was the best and first quarter of the present fiscal is worst”. He noted, sanction of new businesses came down Rs 5,799 crore during the first quarter of the present fiscal from Rs 13,000 crore, compared to same period last year. Disbursements dropped to Rs 3,000 crore from Rs 6,000 crore. Loan sanctions are huge, but disbursement is not happening,” he said.

However, “We are not changing our budget, disbursements and expectations, since projects are getting delayed due to environment clearance,” said Parekh.

Company’s loans gross approval rose 34 per cent in 2010-11 to Rs 42,716 crore from Rs 30,442 crore, a year ago. Company’s loans/gross disbursements stood at Rs 26,702 crore from Rs 12,962 crore, a year ago.

“The delay is mainly due to the power sector and road projects,” he said. At present the company has 45 per cent of the portfolio is on the power sector, while 20 per cent is on transportation, 15 per cent telecom and rest on others including tourism, industrial parks, special economic zones and others.

“We are monitoring power projects. At present Rs 9,000 crore has been given to IPPs, Rs 5,500 crore to captive projects, Rs 3,700 crore for renewable (IDFC is the largest lender for wind projects), Rs 2,800 crore for private utilities, Rs 1,400 crore for transmission and Rs 1,100 crore for oil and gas,” said Parekh.

“We want to expand our portfolio, but for that gov-ernment should expand the definition of infrastructure,” said Parekh. He noted, at present power, transporta-tion and telecom have come under the definition. At present aircraft, ships, social infrastructure including education, hospital and others, which offers opportunity,” said Parekh.

The company has reserve to the tune of Rs 9,000 crore. At present FIIs holds 45 per cent in the company and they are bullish about India’s future, he said.

Total income of the company rose by 33 per cent to Rs 4,933 crore from Rs 4,063 crore. Profit after tax rose to Rs 1,282 crore from Rs 1,062 crore, a year ago.

RBI REPO RATE HIKE
Commenting on RBI’s move increasing repo rate 50 bps on Tuesday, Parekh said, “This will impact the economy, we will become uncompetitive when compared to international players. But we have inflation issue, especially food. He said, this is going to hurt infrastructure, real estate, manufacturing and consumer.

“It will impact cost of funds, lending rates will increase, CPLR will incre-ase 50 basis point, which our clients will have to pay,” said Parekh.