REC net up 70% at Rs 494 cr; FPO gets govt green signal

Written by fe Bureaus | Mumbai | Updated: Oct 30 2009, 05:43am hrs
Rural Electrification Corporation (REC) has reported a standalone net profit of Rs 494.36 crore for the second quarter compared to Rs 292 crore during the corresponding period of the previous year, a rise of 70%. The company posted sales of Rs 1,532.44 crore during the latest quarter against Rs 1,118.02 crore during the year-ago period. Net interest margin was at 4.25%.

REC's total assets increased by 30.49% to Rs 59,724 crore from Rs 45,768 crore. Outstanding borrowings rose by 32.52% to Rs 51,602 crore from Rs 38,940 crore. REC, which provides finance and promotes rural electrification projects across the country, also gives financial assistance to state electricity boards, state government departments and rural electric cooperatives for electrification projects in rural areas.

REC's operating income increased by 41.62% to Rs 1,582 crore from Rs 1,117 crore. Its disbursements rose to Rs 5,504 crore from Rs 4,761 crore, while sanctions surged to Rs 16,339 crore from Rs 15,154 crore.

Meanwhile, the Cabinet Committee on Economic Affairs on Thursday evening approved REC's follow-on public offer (FPO). REC director (finance) HD Khunteta told FE, The FPO is expected to hit the market in January or February next year. REC has already finalised merchant bankers for the proposed FPO. The CCEA approved 5%offloading of the governments stake as well as infusion of 15% fresh equity in REC, home minister P Chidambaram told reporters after the CCEA meeting. The government holds about 82% in the company while the rest is with the public. The government holding will come down to 66.80% after the proposed FPO.

Depending on the market condition, REC may get around Rs 2,500 crore, while the government is set to get Rs 850 to Rs 900 crore.