India’s is an early stage of credit cycle and many finance companies are giving loans like these. In the initial years NPA’s would be low, but most of the businesses will fail anyways, and slowly NPA of NBFC will increase and profits tumble.
The numbers of JagatJit Industries, are of the present, but the loan of setting up of Ethanol plant is given keeping in mind the future. As long as JagatJit as enough cash flows to pay off it’s short term debt, it won’t become an NPA for IREDA.
You can also track the working capital ratio for an individual company, to see it’s ability to pay debt.
Anyways, all these concerns are for IREDA’s management, and as a shareholder I will be more concerned about growing profits and valuations of the company.
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