State-run Rural Electrification Corporation (REC) plans to borrow Rs 28,000 crore in the current financial year for financing power projects, of which Rs 4,600 crore ($1 billion) will be foreign debt.
“To diversify our investor base and to tap the international market at a competitive rate, REC has planned to raise external commercial borrowings (ECB) of $1 billion,” said the chairman and managing director, J M Phatak.
REC had already raised $200 million through ECBs in the April-June quarter and plans to raise another $400 million by the first week of September. It further plans to raise Samurai bonds from the Japanese market, he said. These are yen-denominated bonds issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
It has shown 24 per cent increase in its profit after tax to Rs 587.4 crore in the June quarter, against Rs 471.8 crore during the same period of the previous year. Total income rose to Rs 1,899.6 crore from Rs 1,460.9 crore in the same period last year.
“The power sector is growing and, therefore, there is an increase in demand for loans for setting up projects,” Phatak said. REC has applied to the Reserve Bank of India for NBFC-IFC (a non-banking finance company authorised to deal with infrastructure financing), which would enhance its exposure in financing power projects. Its officials expect to get the approval this month.
It is currently financing power generation, transmission and distribution projects. The capital adequacy ratio (CAR) requirement for an NBFC-IFC is 15 per cent and the company has a CAR of over 21 per cent. REC plans to sanction loans of about Rs 50,000 crore in the current financial year and its disbursements are likely to increase by 30 per cent during the period. It disbursed Rs 21,000 crore of loans in 2009-10.
