Govt to infuse ₹1,500 cr in IREDA to step up RE funding 

New Delhi, January 19 The Cabinet Committee on Economic Affairs (CCEA) on Wednesday cleared a proposal for an equity infusion of ₹1,500 crore in the state-owned Indian Renewable Energy Development Agency (IREDA), a move that will enhance the lending capacity of the non-banking financial company (NBFC) in the renewable energy (RE) sector.

Emissions cut

The Ministry of New and Renewable Energy (MNRE) said the equity infusion will help in generating around 10,200 jobs annually and cut emission to close to 7.49 million tonnes of CO₂ every year.

“Additional equity infusion of ₹1,500 crore by the government will enable IREDA to lend additional ₹12,000 crore approximately to the RE sector, thus facilitating the debt requirement of RE of additional capacity of approximately 35-40 GW. It will also improve the capital-to-risk weighted assets ratio (CRAR) to facilitate its lending and borrowing operations,” an MNRE statement said.

The Mini Ratna’s net-worth stood at ₹3,333.19 crore in H1 FY22 against ₹2,742.98 crore in corresponding previous period. The development also assumes importance as the NBFC plans to increase its loan book from around ₹28,000 crore, as of March 2021, to ₹1.35-lakh crore by March 2026.

AIF in the works

It is also in the process of setting up an Alternate Investment Fund (AIF) to tap large institutional investors such as pension, insurance, and ESG (Environmental, Social and Governance) funds. The AIF will also help IREDA in financing new projects of borrowers nearing their exposure limit.

Welcoming the development, IREDA chief Pardip Kumar Das said, “With the collective and focussed efforts of team IREDA, we are quite confident of achieving a five-times growth target in next five years. IREDA has been rated ‘Excellent’ for the MoU of FY21 with a score of 96.93, from ‘Fair’ in FY20 with a score of 45.83. This truly indicates IREDA’s ability to translate a global pandemic situation into an opportunity, and its adaptability to manage unforeseen transitions. Therefore, IREDA is geared for its IPO in near future.”

Solar projects get most

As of September 2021, solar energy had the highest share of IREDA loans at ₹9,442.16 crore, or roughly 32.7 per cent of all loans disbursed by the state-run NBFC. It was followed by short-term loans of ₹7,696.72 crore (26.7 per cent), wind energy ₹6,017.46 (20.9 per cent), small hydro projects ₹2,900.82 crore (10.1 per cent), biomass & cogen ₹1,516.87 crore (5.3 per cent) and others ₹1,282.42 crore (4.4 per cent).

In Q2 FY22, IREDA reported an income of ₹684.80 crore and a Profit After Tax (PAT) of ₹110.27 crore. Loans sanctioned by the state-run firm were up 405 per cent Y-o-Y to ₹5,925.12 crore against ₹1,172.32 crore in Q2 FY21. Similarly, loan disbursals grew 76 per cent on an annual basis to ₹3,584.90 crore against ₹2,041.34 crore during the review period.

During January-September of FY22, the NBFC posted an all time high PAT of ₹299.90 crore against ₹206.63 crore in HI FY21. Total income from operations rose 8 per cent Y-o-Y to ₹1,386.97 crore against ₹1,284.94 crore, a year-ago. The company brought down its NPAs to 4.87 per cent in H1 FY22 against 5.79 per cent in H1 FY21.

IREDA completed FY21 as the year with the second highest loan disbursements (since inception) at ₹8,827 crore. It also posted its highest ever profit before tax (PBT) of ₹569.52 crore with an annual increase of 136.20 per cent. The net reduction in non-performing assets (NPAs) stood at 5.61 per cent in FY21 from 7.18 per cent in FY20.

In FY21 the company sanctioned and disbursed loans amounting to ₹11,001.30 crore and ₹8,826.64 crore, respectively, despite the Covid-19 pandemic.

Total sanctions and disbursements as of FY21 stood at ₹96,601.19 crore and ₹63,115.90 crore, respectively. The loans sanctioned during FY21 include co-financed projects and take over loans to support capacity addition of 6,965.82 megawatts (MW) as against 5,673.48 MW in FY20.

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