PNB Upgrades IL&FS Tamil Nadu Power Project Loan to Standard Asset

Mumbai: In a significant financial turnaround, Punjab National Bank (PNB), the lead banker for IL&FS Tamil Nadu Power Company (ITPCL), has upgraded its loan accounts from non-performing asset (NPA) to standard as of July 29, 2025. This strategic move paves the way for lenders to recover nearly Rs 6000 crore of previously written-off loans.

Restructuring Leads to Sustainable Debt Repayment

ITPCL, a subsidiary of IL&FS Energy, operates a 1,200 MW coal-fired thermal power plant in Cuddalore. The company's debt, which stood at Rs 9,587 crore as of March 2023, has been restructured with 65% classified as sustainable under a new repayment plan extending till FY2038. The remaining unsustainable debt carries a nominal interest rate of 0.001% and is scheduled for lump-sum payments in FY2039 and FY2040.

Improved Financial Health and Future Challenges

Following the successful restructuring in September 2023, ITPCL has repaid Rs 3,600 crore, significantly reducing its outstanding debt to approximately Rs 6,000 crore. Despite these improvements, the company faces ongoing challenges, including high generation costs and tariff volatility in the merchant market. However, initiatives like the construction of a captive jetty aim to reduce coal transport costs and improve competitiveness.

Looking Ahead

The upgrade of ITPCL's loan status marks a pivotal moment in the IL&FS group's recovery journey, highlighting the importance of regulatory support and strategic financial planning in overcoming systemic risks in infrastructure financing.