Rural Electrification Corporation (REC) has received Rs 42,700 crore as repayment from state distribution companies under Ujjawal Discom Assurance Yojana (UDAY) after discoms raised Rs 2.3 lakh crore through bonds. For the quarter ended March 31, 2017, REC’s net profit grew 13.7% to Rs 1,319 crore, while total revenue fell 1.74% to Rs 5,978 crore. The company made an impairment provision of Rs 616 crore for two power projects, one in Tamil Nadu and one in Sikkim. For Fy17, the financier’s net profit rose 11% to Rs 6,246 crore while the total income fell 1.7% to Rs 23,350.79 crore.
The power sector lender had lent around Rs 78,000 crore to various states. The UDAY scheme provided for 75% of the loans being converted into state government bonds. The remaining 25% rests on the books of discoms and will be paid as regular debt.
Not all states entered UDAY for financial restructuring. The exposure to those states will be serviced by them as debt,” said PV Ramesh, chairman and managing director of REC. “We have already disbursed the repayments received from discoms as part of our total disbursements of Rs 58,000 crore in financial year 2016-17. We borrowed only Rs 28,000 crore in FY17,” Ramesh said.
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In FY18 the company plans to raise around Rs 55,000 crore of which Rs 7,000 crore to Rs 10,000 crore will be through foreign currency loans. The company will look at raising green dollar denominated bonds, Masala bonds and a niche new category of social impact bonds. In the domestic market the company would look at issuing commercial paper, 54 EC bonds and tax free bonds. “Around Rs 30,000 crore would be raised through rupee denominated bonds including commercial papers and 54 EC bonds or tax saving bonds. The company had not issued tax saving bonds in the last 3 years and plan to do one in this financial year,”said Ramesh.
“The company has the mandate to raise around $300 million in foreign currency loans by June end, which the company wants to take up to $450 million. These would be 10 year bonds with a market driven coupon rate. REC has a total loan book of Rs 201,929 crore and outstanding borrowings of Rs 167,517 crore as of March 31, 2017. The cost of borrowings has gone down by 37 basis points to 6.85% in 2016-17.