Infrastructure financing firm IDFC Ltd today said it will make an additional provisioning of Rs 2,500 crore in the second quarter of this fiscal against coal and gas power assets, as it transitions into a bank by the end of the period.
IDFC said with these additional provisions, its net worth will reduce by approximately Rs 1,600 crore.
“Given that we will be transitioning to a bank by the end of second quarter of 2015-16 with no visible solution for these assets, we believe it is prudent for us to make incremental provisions against known risks,” IDFC said in a BSE filing.
It further said: “...we plan to make additional provisions of approximately Rs 2,500 crore in the second quarter against coal and gas power assets to make sure that we have provided 50-60 per cent against our aggregate stressed loan assets, many of which will not be NPAs on September 30, 2015.”
The company said it plans to create these additional provisions by utilising the non-distributable special reserves that have been created over the past several years, subject to appropriate approvals.
IDFC said the volume of net restructured assets, non-performing assets (NPAs) and security receipts (SRs) as of June 30, 2015 was 8.4 per cent of its loan book.
“Almost 80 per cent of our risks relate to coal and gas-based assets,” the company said.
Shares of IDFC were trading at Rs 151 apiece at the BSE in morning trade, down 1.18 per cent from their previous close.