Pradip Kumar Das, CMD, IREDA, says “keeping in mind the nuances and intricacies of renewable energy, we have maintained a steady growth. So having a higher name and adding NPA does not sound good. Our NPA has been drastically reduced in the last three years. Our loan book has enhanced more than double in three years what we had in 33 years. And the NPA has been reduced from 7.18 to 1.65. So having just a little bit of compromise on name, that has enabled all these things.”
Congratulations. You are a mini Navratna and now there are talks that there will be soon a conversation for a Navratna status as well. What benefits would accrue to you, and what is the kind of autonomy that you would have if you indeed do get this status?
Yes, there are many direct as well as indirect things but a couple of things I can share with you. One, that we will have autonomy for creation of posts up to E7 level within the organisation by our board itself and for which we need not approach the ministry. That is number one. Then for any capex investment of up to Rs 500 crore, our board can do itself.
This kind of autonomy will enable another perception in the market. Today, once we get listed, not only our fundamentals, but what kind of perception our investors are carrying, that will pay us in due course of time. Our borrowers have excellent perception about us, and they have seen how during Covid, we handled the situation. So we work with a holistic approach, keeping in mind the policy perspective of MNRE being the extended arm of MNRE for development of RE in the country.
Keeping in mind the nuances and intricacies of renewable energy, we have maintained a steady growth. So having a higher name and adding NPA does not sound good. Our NPA has been drastically reduced in the last three years. Our loan book has enhanced more than double in three years what we had in 33 years. And the NPA has been reduced from 7.18 to 1.65. So having just a little bit of compromise on name, that has enabled all these things.
Renewable energy has really picked up. Quantify the opportunity that it presents for you. Companies like PFC and REC are also entering the renewable energy space. Is this posing a challenge to your growth?
See, renewable energy was always a challenge and it will continue to be a challenge. And we have already a proven track record of 36 years of servicing to the nation by adhering to the best quality governance norms and compliance of RBI, as well as best quality service standards to the stakeholders, the developers in particular and which has resulted today the largest pure play green finance company in the country. PFC and REC are getting into renewable in a big way now as the future is renewable and we have to look for at least 90% of the energy requirement from renewable and other sources because we have to focus not only on energy development, but also decarbonisation and energy transition. So keeping those three things in mind, till 2030, we envisage another 320 gigawatt of capacity addition in the renewable itself will be there. This will require around Rs 30-32 lakh crores of investment in the country. If you take 75-25 debt equity, it means roughly Rs 24 lakh crore of investment from the debt market is required. If you take 50-50 debt from NBFCs and others, around Rs 12 lakh crore will be needed from the NBFC space in which IREDA, REC, PFC are going to play a very major role.
Since the future is renewable and not that much thermal addition will happen, but still around 32 gigawatt has been planned for 2030 in order to ensure load balancing support as well as peak load requirements till we have enough storage to support around the clock that is 24 hours renewable power. Till such time we need to depend also on thermal.
REC and PFC are largely dealing in thermal – today 90% of their books are in thermal. Gradually they will improve and increase in renewables. Whereas we are 100% renewable. Since we have the mastery and expertise in this field for 36 years, we will continue to get our business here. Till September, we have around 31% of market share in the NBFC space. And we are quite confident of continuing such a kind of thing in the time to come.
Your CRAR is around 20% with the fresh issue, Where would it stand and what is the of growth runway that this capital raise offers for you?
We have been upgraded from AA plus to AAA stable six months back. In order to sustain that AAA stable rating, we will always prefer to keep our CRAR around 17%. Right now it is around 20%, you are right. It was around 18% in June. With further equity infusion, it will further go up. But we have a fair amount of sanction and disbursements in the pipeline. We believe in best quality corporate governance and we adhere to RBI’s compliance governance norm fully – 30% exposure to any entity and 50% exposure to any group.
We are quite confident this additional Rs 1290 crore we will be receiving now towards equity will support further leveraging and at any point of time, we will strategically keep around 7 times of capital gearing ratio. So another Rs 10,000-12,000 crore of further financing is possible by fully leveraging our equity to 7 times.
What is the outlook in terms of viewing asset quality going ahead because in the past, the likes of PFC and REC had high NPAs. Do you see any downside risk amid the high growth that you are witnessing?
Today we finance around 62% in traditional areas like wind, solar and hydro by 30%, 20% and 12% respectively. But you have seen this category, our generation category assets, 80% assets are commissioned assets. I will request not to compare REC, PFC with IREDA because our loan book is purely green finance and 77% of our loan book is private sector owned.
Our country is growing renewable at jet speed and solar has grown 25 times in the last nine years. Ethanol and others have grown five times roughly. So ethanol and CBG, e-mobility, related infra and the new and emerging like offshore wind, green hydrogen and its derivative like green ammonia etc., are new and emerging and also storage with pump storage and battery storage, are the new areas.
IREDA has already established a track record of transitioning the traditional RE to established RE which is established now, that is wind, solar, hydro and in the time to come, we will be playing that kind of key role in transitioning the new and emerging areas of RE also.
We have to keep on doing a lot of R&D. We need to see what are the best practices available globally. We need to handhold the best quality corporate consultants of internal standards and that is happening globally, we need to adapt as fast as possible. In the last 35-36 years, we have financed more than Rs 1,07,000 crore till September and our cumulative write-off is just Rs 203 crore which is less than 0.2%. So that speaks of our asset quality management.
