REC logs highest annual profit of Rs 14K crore on lower stressed assets

REC Ltd, which is one of the leading non-banking financial companies (NBFC) in the energy sector, has registered its highest ever annual profit during the financial year 2023-24, owing to a reduction in stressed assets and diversification into newer business areas.

During the financial year 2023-24, REC clocked a net profit of Rs 14,019 crore as against Rs 11,055 crore in FY23, showing growth of 27 per cent. In the same period, its net income was up by 49 per cent to Rs 15,063 crore.

"Owing to the improving asset quality and effective resolution of stressed assets, resetting of the lending rates, and effective management of finance cost, REC is able to record its highest ever annual profit after tax," said the company in a statement.

With consistent growth in profit, the company said its net worth has grown to Rs 68,783 crore as on 31 March 2024, registering an increase of 19 per cent year-on-year.

The company's loan book has grown by 17 per cent to Rs 5.09 trillion as against Rs 4.35 trillion as on March 2023, which is also the highest ever. The NBFC, which has widened its scope beyond the pure play power sector, now lends to green energy, infrastructure, and new age energy transition projects as well. Last year, REC signed Memorandums of Understanding (MoUs) worth Rs 2.85 trillion during the G20 Energy Transition Ministerial with close to 25 renewable energy companies to lend for clean energy projects.

V K Dewangan, chairman and managing director, REC Ltd, in a recent interaction with this paper had said, while the company will continue to focus on existing schemes, it is looking at a larger shift in its portfolio towards green energy projects, infrastructure segments, and tapping into global climate funds. He also said, REC is exploring several ways to reduce the cost of funding renewable energy projects.

The Capital Adequacy Ratio (CRAR) of the company stands at 25.82 per cent as at 31 March 2024, it said.

"Signifying improving asset quality, the net credit-impaired assets as at 31 March 2024 have reduced to 0.86 per cent from 1.01 per cent as at 31 March 2023 with a Provision Coverage Ratio of 68.45 per cent on non-performing assets (NPA), as at 31 March 2024," said REC's statement.

During the fourth quarter of the year, REC registered a net profit of Rs 4,016 crore, showing a jump of 34 per cent over the corresponding period during FY23. Its net income was up by 34 per cent to Rs 3,001 crore.

REC has been the nodal agency for various nationwide schemes of the Ministry of Power, most notably being the rural electrification under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and the SAUBHAGYA scheme. REC is currently one of the nodal agencies of another flagship scheme of the Centre - the Revamped Distribution Sector Scheme (RDSS), which is aimed at improving the financial and operational health of the state-owned power distribution companies (discoms). It was also recently entrusted with the newly launched PM Suryaghar Yojana aimed at boosting rooftop solar solutions across the domestic segment.

The Board of Directors of REC declared the final dividend of Rs 5 per equity share (on face value of Rs 10 each) and the total dividend for FY 2023-24 is Rs 16 per equity share.