• Deccan Chronicle
  • Andhra Bhoomi
  • Asian Age
  • ePaper
  •  Auto Refresh
Home

ePaper
Last Updated:09:08 AM IST | Saturday, Jan 28, 2023
  • Home
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
Menu
  • Home
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
Home > Markets > NTPC, SAIL not keen on acquiring stressed assets
Markets
NTPC, SAIL not keen on acquiring stressed assets
Subhash Narayan
By  
  , Published : Jun 5, 2017, 11:47 am IST | Updated : Jun 5, 2017, 11:47 am IST

Despite the prodding from finance minister Arun Jaitley, PSUs such as NTPC and Steel Authority of India (SAIL) remain reluctant to take over stressed steel and power projects as state-owned banks’ bad loans continue to pile up, adding to the government’s worries.
According to the Reserve Bank of India (RBI), the steel sector has the highest share of bad loans, followed by the power industry. Industry sources said private steel producers like Electrosteel, Essar Steel, Jindal Steel and Power, Bhushan Steel, Bhushan Power and Steel and Uttam Galva Group, which have taken huge loans from public sector banks, are under tremendous financial stress and there is a serious doubt if their existing promoters would be able to repay loans.
In the power sector, more than 40,000mw generation capacity built by private players, including Adani Power, Lanco Power and Tata Power, is facing viability issues in the absence of power purchase agreements or due to lack of fuel linkage or because of developers’ inability to pass on increased fuel costs to customers, according to the Association of Power Producers (APP).

Public sector banks have a huge exposure to these power projects as well. If banks do not recover loans from steel and power sectors, their NPAs could spike. That is what has the government is worried about.
Sending out a strong message to corporate loan defaulters, Jaitley had in October asked NTPC and to explore the possibility of assuming control of some stressed projects in their respective sectors, as existing promoters were lax or unable to repay debt.
The finance ministry advised this extreme step after several debt restructuring plans implemented by banks proved ineffectual in reviving these stalled projects.
But neither NTPC nor SAIL has so far made any headway in this direction. An official in NTPC told Financial Chronicle that it is not feasible for the company to acquire stressed private power projects, as their valuations are way too high.
There is also the risk of the government auditor raising issues over valuations, the official added.
That apart, the PSU has drawn up Rs 30,000-crore-expansion plan for 2016-17 and to fund that, it needs money, the official stated.
So far as SAIL is conce?rned, its financial performance has dropped significantly in recent years due to tough market conditions. The company reported a net loss of over Rs 4,000 crore in 2015-16.The PSU continues to remain in the red.
“Even public sector has its own expansion plans and hence acquiring and managing stressed steel business may be an additional challenge that it does not want to take upon itself in view of its own struggle to turn profitable,” Anjani Agrawal, global steel leader, EY, told FC.
Salil Garg, director at In?d?ia Ratings & Research, agr?e?ed with Agrawal’s asse?s?s?m?ent. “The government
m?o???ve to ask state-owned firms to explore the possibility of taking over stuck steel, power projects may not yield significant results as PSUs have their own capex plans to fund, leaving a limited balancesheet room,” he said.
With big projects stuck, state-owned banks’ bad loans continue to rise. The RBI has warned in its latest FSR that under its baseline scenario, PSBs’ gross non-performing asset ratio may increase to 12.5 per cent in March 2017 and then to 12.9 per cent in March 2018 from 11.8 per cent in September 2016. end-of
Tags: 
news
Latest From Markets
After swinging over 423 points intra-day, the 30-share BSE Sensex ended down by 304.26 points, or 0.73 per cent, at 41,253.74. (Photo: File | PTI)

Sensex tanks 304 points on last day of 2019; Nifty drops below 12,200

The 30-share BSE Sensex fell 108.21 points or 0.26 per cent to 41,449.79, and the broader NSE Nifty slipped to 12,227.75. (Photo: File | AP)

Sensex drops over 100 points amid thin global trade

Besides, weakening of the American currency in overseas market supported the rupee, while steady rise in crude oil prices and weak opening in domestic equities weighed on the local unit, forex traders said.

Rupee rises 8 paise to 71.23 against US dollar in early trade

Most Popular

Mukesh Ambani 9th richest on Forbes' real-time billionaires list
Top credit card myths harmful for your financial well-being
Microsoft CEO Satya Nadella tops Fortune's Businessperson of the Year 2019
Employment growth slowed down in last two years: report
GST structure: key challenges and its solutions

Editor's Picks

Income tax e-filers drop by over 6.6 lakh in FY19: Official data
Swiping on your smartphone reveals a lot about you to your social media company
  • Read Financial Chronicle as it appears in print.
  • Subscribe, and get it delivered in the inbox everyday.
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
  • Home
  • About Us
  • Contact Us
  • Terms of Service
  • Privacy Guidelines
  • Copyright © 2019 Financial Chronicle, All rights reserved
Developed & Maintained By Daksham