Punjab National Bank (PNB)’s exposure to Videocon Industries and Aban Offshore slipped in the June quarter, the country’s second-largest state-owned lender has told analysts and investors. According to two people aware of the development, PNB said in an analyst conference call that its Rs 770-crore exposure to Videocon and Rs 307-crore exposure to Aban have turned bad. On Wednesday, PNB reported a 12% year-on-year (y-o-y) rise in its net profit to Rs 343 crore for the quarter ended June. Its gross non-performing asset (NPA) ratio rose 113 basis points (bps) sequentially to 13.66%, while the net NPA ratio rose 86 bps to 8.67%. The bank has total exposure of Rs 11,000 crore to nine of the 12 accounts referred by the Reserve Bank of India (RBI) for resolution under the Insolvency and Bankruptcy Code (IBC), according to an analyst, and the lender will have to make additional provisions of Rs 1,000 crore towards them over the next three quarters. PNB is the first large lender to recognise Videocon as an NPA. On May 9, Videocon was declared an NPA by mid-sized lender Dena Bank. Its gross debt stood at Rs 47,554 crore in December 2015.
In FY16, the company’s consolidated net profit stood at Rs 1,368 crore on the back of Rs 10,311 crore in revenues. Earlier, bankers told FE Videocon had been trying to repay debt by selling some of its businesses such as Kenstar, merge its direct-to-home division with Dish TV and lobby for the troubled Petrobras project in the Sergipe Basin, where the company is in a joint venture with Bharat Petroleum (BPCL). Aban Offshore owes Rs 12,030 crore to lenders as on March 31.
Both companies are likely to be on a second list of defaulters that the regulator is believed to be preparing for resolution under the Insolvency and Bankruptcy Code. On June 13, RBI had asked banks to refer a dozen stressed companies — with a combined debt of close to Rs 2.4 lakh crore — to the NCLT. Bankers were given a fortnight from the date of issue of the notification to move the tribunal.
