Proactive measures to mitigate potential risks
Conservative proactive measures have always complemented PEL’s bold strategic decisions, which enabled the Company navigate through challenging business environments.
Some of these proactive measures generally taken by the Company include:
Always maintained low leverage in the Financial Services business and allocated significant capital of ~`5,000 Crores to the business post the ~`7,000 Crore fund-raise in FY2018
Created independent risk and legal teams reporting directly to the Board
Unique asset monitoring process, that gives early warning signals
Maintained conservative provisioning despite healthy asset quality – 1.9% of overall loan book vs. GNPA ratio of 0.9%; 224% PCR1 - higher than top players in the industry
Proactively improved borrowing mix, by reducing share of CPs over the last 6 months from `18,000 Crores as on Sep-2018 to `8,900 Crores as on Mar- 2019
Nurtured a strong quality-driven culture in the Pharma business and hence, successfully completed 33 USFDA inspections
Periodic portfolio stress test – identified 18 deals and addressed potential asset quality stress under hypothetical, worst-case scenarios
Note: 1. PCR - Provision Coverage Ratio
Sensitivity Analysis: Residential Real Estate Portfolio
Even in the hypothetical worst case scenario, only 18 of 242 deals required ‘proactive measures’
Factors considered for sensitivity analysis:
- Cash cover
- Pricing
- Construction status
- Financial closure