REC (NSE:RECLTD)came into being in 1969 to articulate a response to the pressing exigencies of the nation. During the time of severe drought, the leaders sought to reduce the dependency of agriculture on monsoons by energizing agricultural pump-sets for optimized irrigation. Thereafter, REC has ventured into newer paths and expanded its horizons to emerge today, as a leader in providing financial assistance to the power sector in all segments, be it Generation, Transmission or Distribution.1

REC is a Navratna company under the Ministry of Power. The company fund its business with market borrowings of various maturities, including bonds and term loans apart from foreign borrowings, on its own. Domestically, the company hold the highest credit ratings from CRISIL, ICRA, IRRPL and CARE and internationally REC is rated at par with the sovereign ratings. Under the discerning leadership of highly qualified and experienced professionals, which has effectively harnessed the individual talents of all its employees, REC has maintained consistent profit margins and paid dividends each year since fiscal 1998. REC has thus propelled itself  to a net worth of over ₹40,000 crore.

The company's humble beginnings spearheaded its strides into the corporate world and to this day its commitment towards nation-building constitutes its core value. As a natural corollary, REC has been appointed as the nodal agency by the Government of India for implementation of Saubhagya (Pradhanmantri Sahaj Bijli Har Ghar Yojana) and DDUGJY (Deendayal Upadhyaya Gram Jyoti Yojana), the schemes which aim at providing 24x7 sustainable and affordable powers to all households in the country. REC has also been entrusted with the responsibility of being the coordinating agency for rolling out UDAY (Ujwal Discom Assurance Yojana) which seeks to operationally reform and financially turnaround the power distribution companies of the country.

The company's two subsidiaries – RECPDCL (REC Power Distribution Company Limited) and RECTPCL (REC Transmission Project Company Limited) work in tandem with it to realise its shared mission by providing consultancy services in Distribution and Transmission sectors.

The company take due cognizance of the fact that the company owe its stupendous success to its customers, the unflinching commitment of its employees and its countrywide presence through 22 state offices which ensures easy accessibility. Having bolstered its share in the country’s total power capacity, REC is poised to help build a sound infrastructure to provide affordable, accessible and sustainable power.



REC is a Navratna Central Public Sector Undertaking under the Ministry of Power. It is a leading infrastructure finance company with a net worth of over ₹40,000 crore. The company's business activities involve financing projects in the complete power sector value chain, be it generation, transmission or distribution. The company provide financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities through its extensive network of 22 offices across the country.2

The different types of projects funded by REC are as under:

·      Loan for Generation Projects

  • Setting up new power generating stations based on conventional sources of energy, i.e. Thermal, Hydro and Gas, along with associated areas like development of coal mines
  • Renovation and Modernization (R&M) of existing power generating stations based on conventional sources of energy
  • Setting up of power generation plants based on Renewable Energy sources like Solar, Wind, Small Hydro, Biomass etc.

·      Loan for Transmission Projects

  • Evacuation of power from new power generating stations and strengthening/ improvement of existing transmission system in the designated areas

·      Loan for Distribution Projects

  • Strengthening and improvement of the power sub-transmission and distribution system in the designated areas
  • Conversion of Low Voltage Distribution System (LVDS) to High Voltage Distribution System (HVDS) in rural areas
  • Purchase of equipment and materials for strengthening/ upgradation of T&D systems
  • Intensive load development for providing connections to rural consumers in already electrified villages
  • Setting up of electrical infrastructure for energization of agricultural pump sets

·      ​Short Term Loans / Medium Term Loans

  • Working capital requirements for purposes like purchase of fuel for power plant, purchase of power, purchase of material and minor equipment, system and network maintenance including repair of transformers, etc.

Financial Products

REC offers a gamut of financial services that cater to entities across the power sector value chain to help them set up power infrastructure, bolster operational efficiency, broaden their product portfolio and implement innovative technology solutions. The company address the financial needs of state power utilities, private sector project developers, central power sector utilities and state governments to facilitate investments in power generation, power, transmission, power distribution and system improvement initiatives.3

  • Long Term Loan
  • Medium Term Loan
  • Short Term Loan
  • Debt Refinancing
  • Equity Financing
  • Financing Of Equipment Manufacturing (Em) For Power Sector
  • Financing of Coal Mines

Industry Overview

India is the third largest producer and third largest consumer of electricity in the world, with total installed power capacity of over 370 GW as on March 31, 2020. Indian power sector is highly diversified with conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power on one hand; and renewable energy sources such as solar power, wind power and agricultural & domestic waste, on the other hand. The share of renewable energy in the generation mix of the country is consistently increasing. India is pursuing an ambitious target of having 175 GW of installed renewable energy capacity by year 2022, which includes 100 GW of solar power alone. The Government of India’s focus on attaining ‘24x7 Power For All’ has accelerated the capacity addition in the country. Further, the Government is pursuing energy efficiency measures through innovative programmes such as UJALA, SLNP, National E-mobility Programme and Super-Efficient Air Conditioning Programme etc., which serve the dual purposes of reduction in power bills and enhancement of environmental sustainability. 4

The Government has launched many policy-oriented and consumer-centric initiatives in the last few years, including targeted efforts to turnaround debt-ridden DISCOMs. Around 750 million people in the country have gained access to electricity between years 2000 to 2019, reflecting strong and effective policy implementation. Furthermore, there is a keen focus on becoming a low carbon economy and lowering the operational costs of conventional power plants.

Industry Structure


The accelerated pace of generation capacity addition over the past few years has led to a situation where the electricity supply potential is greater than the economic demand. The past few years have seen several policy initiatives to enhance the generation scenario, including steps to improve the working & performance of thermal power plants, streamlining of coal block allocation, improvement in coal availability & supply, quality checks of coal at mine-end and plant-end, beneficiation of coal at coal washeries, redefining of coal linkages and swapping of coal mines, and so on.

As on March 31, 2020, the installed power generating capacity in the country stood over 370 GW, which included 93,477 MW (25%) in the Central Sector; 1,03,322 MW (28%) in the State Sector and 173,308 MW (47%) in the Private Sector. In terms of generation capacity by type as on March 31, 2020, the installed thermal capacity was 2,30,600 MW (62%), installed hydro capacity (renewable) was 45,699 MW (12%), installed capacity in renewable energy (RES-MNRE) was 87,028 MW (24%) (which includes solar, wind, small hydro project, biomass gasifier, biomass power and urban & industrial waste power); and nuclear capacity was 6,780 MW (2%). The electric energy generation during financial year 2019-20 was 1,252.61 Billion Units (BUs), as against 1,249.34 BUs in the preceding year.

Renewable Energy Sources

The Indian renewable energy sector is the fourth most attractive renewable energy market in the world. With the increased support of the Government and improved economics, the sector has become attractive from investors’ perspective. In a recent move, the Government has approved a new Hydro Policy aimed at boosting the sector, by according large hydro projects the status of renewable energy projects. Earlier, only smaller projects of less than 25 MW in capacity were categorized as renewable energy. With the removal of this distinction, large hydro projects will get included as a separate category under the non-solar renewable purchase obligation policy, thus mandating power purchasers to source a portion of electricity from large hydro projects.

The Government of India has set ambitious targets for renewable energy for the short to medium term. By year 2022, the country aims to have 175 GW of installed renewable energy capacity, including 100 GW of solar, 60 GW of wind, 10 GW of biomass and 5 GW of small hydropower. In addition, the MNRE is targeting 1 GW of geothermal capacity by 2022. The National Electricity Plan 2018 further raises the ambition to achieve 275 GW of renewables by year 2027, which would increase the share of renewable energy to 44% of the installed capacity and 24% in electricity generation.

Solar PV has been on a rapid rise in the recent years. To increase investment in renewables in a cost-effective way, India has introduced national competitive auctions for wind and solar PV. To ensure continuous progress in the growth of renewables, it is critical to focus on auction design, grid connections and financial health of DISCOMs. Modern renewable energy is not only used in electricity generation, it also has potential for heating, cooling and transport solutions. The Government is working on a holistic strategy to tap into this potential for a sustainable impact on environment and the air & water quality as well. Potential also exists in scaling up the use of bio-energy, including Energy-from-Waste, which requires robust sustainability governance.

Transmission and Distribution


The natural resources in the country for electricity generation are unevenly dispersed and concentrated in just few pockets. Transmission is therefore an important element in the power delivery value chain, facilitating evacuation of power from generating stations and its delivery to load centres. For efficient dispersal of power to deficit regions, it is necessary to strengthen the transmission system network, enhance the Inter-State power transmission system and augment the National Grid. An extensive network of transmission lines has been developed over the years for evacuating power produced by different generating stations and distribution of the same to the consumers.

During financial year 2019-20, a total of 11,664 cKm (circuit kilometres) transmission lines were added, as compared to about 22,437 cKm during the previous fiscal. Further, transformation capacity of 68,230 MVA(megavolt amp) was added during financial year 2019-20 at 765 kV, 400 kV and 220 kV levels taken together. The country’s power transmission sector has witnessed unprecedented growth in the past five years, with line length and transformation capacity growing at an average annual growth rate of 6.5% and 9.6%, respectively. The nominal Extra High Voltage lines in vogue are ± 800 kV HVDC & 765 kV, 400 kV, 230/220 kV, 110 kV and 66 kV AC lines. Further, both operational and financial performances of the transmission utilities have witnessed an improvement. Going forward, an estimated `2.6 trillion of investment is required in the transmission sector to meet future peak load, which is expected to reach 234 GW by 2021-22.

The Government has taken several policy measures for improvement of the power transmission sector of the country. One such initiative is Green Energy Corridor, which aims to facilitate grid integration for evacuation of power from renewable energy projects across the country. Several grid expansion programmes and cross-border links are underway to expand the grid infrastructure. The private sector is expected to play an important role in achieving the country’s grid expansion target, as competitive bidding gains momentum at both inter-state and intra-state levels. REC has also sanctioned financial assistance to a few Green Energy Corridor Transmission projects, and more projects are in the process of appraisal/approval.

Transmission utilities, both at the Central and State level, are expected to invest significantly in new technologies to make grids more reliable, resilient, secure and smart. Further, ‘One Nation One Grid’ has proven to be pivotal in bringing down energy deficit across various regions and bringing uniformity in power prices. The transmission sector is also expected to immensely benefit from major policy reforms such as amendments to the Electricity Act and Tariff Policy. The sector works as a foundation stone, strongly holding the development of power generation and distribution segments. It goes unsaid that the growth of power sector is contingent to the development of a robust and reliable transmission network.


Distribution is the most important link in the entire power sector value chain, as it interfaces between utilities and consumers. Despite being the cash register of the power sector, distribution is the weakest link of the country’s power value chain. Historically, power distribution has been in the realm of State Governments, with private sector players only having a limited part. For many years, DISCOMs have been reeling under huge accumulated losses and outstanding debts at high interest rates, thus causing a vicious cycle of operational losses being funded by debt. The abysmal financial health of the DISCOMs is a major roadblock towards improving evacuation efficiency. The dismal performance of the sector has made it crucial for the policy makers, to devise various measures to make the State DISCOMs & Utilities viable.

In year 2015, the Government of India introduced the Ujwal DISCOM Assurance Yojana (UDAY), a scheme for operational & financial turnaround of DISCOMs. Under this scheme, the respective State Government would take over the debts of DISCOMs/Utilities, so that the DISCOMs/Utilities could take up their future capex programmes. The Government of India also unveiled the ambitious `16,320 crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) in financial year 2017-18 for universal household electrification. The Government has also introduced smart prepaid meters to reduce “non-technical losses” and prevent electricity theft, meter tampering and non-payment by customers. With strong reforms for support, DISCOMs have started to show positive results. REC, in coordination with the Ministry of Power, has contributed towards turnaround of the power distribution sector by partnering in programmes like DDUGJY, SAUBHAGYA and NEF, to name a few.

Besides the reforms to make the sector more efficient, the distribution sector has also witnessed unprecedented increase in the reach and penetration of electricity in the far corners of the country. With successful village electrification of all inhabited villages in the country, followed by the ambitious SAUBHAGYA scheme for household electrification, distribution sector has indeed come ahead a long way.


India is expected to remain as one of the fastest growing emerging market economies in the world, despite challenging business environment. With key reforms on the block, India is seen as an engine of global growth. Factors like structural reforms, GST, IBC, inflation targeting measures, financial inclusion, changes to FDI policy, measures to curb black money and more digitization through alignment of information aggregating platforms, are all expected to help India in improving its productivity dynamics and achieving sustainable growth.

In the power sector, enhanced spending, faster implementation and continuation of reforms are expected to provide further impetus to growth. India has a huge potential to become the leader in renewable energy space, which is already a key focus area of the Government. This sector is bound to play a major role in the coming years, as the country looks to meet its energy needs. Furthermore, development of Smart Cities and introduction of energy saving and storing devices like battery banks and ancillary services might become new paradigms of investment traction.

As per CEA estimates, the electrical energy requirement in the country is expected to grow to 1,566 BUs by financial year 2021-22. Government’s thrust on providing 24x7 quality power supply will further drive the demand and also give a push to the economy. Result-oriented Government reforms like SAUBHAGYA, DDUGJY, IPDS and UDAY are also expected to attract and accelerate investments in the distribution infrastructure, thus resulting in faster accomplishment of loss reduction and better realization of revenue and automation goals. The enormous capital expenditure and development of equally huge operational infrastructure create a promising business outlook for the Company.

The new norms of ‘social distancing’ and ‘work from home’, brought into the picture by COVID-19, have put an increased focus like never before on the centrality of electricity in powering its current and future societies. Having said that, the power sector is not immune to the adverse effects of the pandemic and its impact on decreased economic activity. The long-term impact would become apparent only with passage of time. Nevertheless, early impacts on the Indian power sector are already becoming evident, such as reduction in electricity demand from industrial and commercial customers, increase in residential demand, suppression of plant load factor, payment delays by DISCOMs and squeezed liquidity in general.

The Government is taking various steps to tackle this unprecedented situation, notably on the front of liquidity support. The Reserve Bank of India had allowed a moratorium on loan repayments for a period of six months, during March to August 2020. Further, the Ministry of Power has supported the injection of liquidity in cash-strapped DISCOMs through REC and PFC, by grant of Special Long-Term Transition Loans for making payments to generators. These steps are likely to safeguard the sectoral dynamics.

Financial Overview

The Company gives utmost priority to the timely realization of its dues towards principal, interest, etc. The amount due for recovery including interest for Standard Assets (Stage I & II) during the financial year 2019-20 was Rs 62,340.60 crore (excluding Rs 1,496.20 crore deferred as per the COVID-19 moratorium policy), as compared to Rs 55,155.10 crore during the previous financial year. The Company recovered a total sum of Rs 61,945.04 crore towards Standard Assets (Stage I & II) during the financial year 2019-20, as against Rs 54,502.06 crore during the previous financial year. The Company achieved recovery rate of 99.37% for the financial year 2019-20. The overdues from defaulting borrowers pertaining to Standard Assets (Stage I & II) as on March 31, 2020 was Rs 2,887.29 crore (excluding Rs 1,496.20 crore deferred as per the COVID-19 moratorium policy). Further, an amount of Rs 614.69 crore has been recovered during financial year 2019-20 from Credit Impaired Assets (Stage III), as compared to Rs 591.14 crore recovered during financial year 2018-19.

REC’s Credit Impaired Assets (Stage III) continue to be at low levels. As on March 31, 2020, the gross Credit Impaired Assets (Stage III) were Rs 21,255.55 crore, which was 6.59% of the Gross Loan Assets; and the Net Credit Impaired Assets (Stage III) were Rs 10,703.42 crore, i.e., 3.32% of the Loan Assets.

The operating income of REC on a standalone basis was Rs 29,791.06 crore during the financial year 2019-20, as against Rs 25,309.72 crore in the last financial year. The Profit Before Tax for the financial year 2019-20 was Rs 6,983.29 crore, as against Rs 8,100.50 crore in the last financial year. Net Profit and Total Comprehensive Income for the financial year 2019-20 were Rs 4,886.16 crore and Rs 4,336.37 crore respectively, as compared to Rs 5,763.72 crore and Rs 5,703.18 crore in the last financial year. Further, REC’s Net Worth as on March 31, 2020 stood at Rs 35,076.56 crore, which was 2.26% higher than its Net Worth of Rs 34,302.94 crore as on March 31, 2019.

Further, the Company’s operating profit for the year 2019-20 reduced to Rs 6,919.37 crore, as against Rs 8,069.06 crore in the financial year 2018-19. The reduction in operating profit was primarily due to exceptional volatility in the global and financial markets due to COVID-19 pandemic, leading to higher foreign exchange differences charged to the Statement of Profit & Loss during the year. Reasons for reduction in net profit margin are also the same as that for reduction in operating profit margin. Further, the Return on Net Worth declined from 17.31% in 2018-19 to 14.09% in 2019-20, primarily due to the decrease in profits of the Company.

During the financial year 2019-20, the Company sanctioned total loan assistance of Rs 1,10,907.99 crore towards various power sector projects/schemes. The same included Rs 55,811.89 crore sanctioned towards generation projects, Rs 7,026.33 crore towards renewable energy projects, Rs 41,604.77 crore towards T&D projects and Rs 6,465.00 crore towards short term, medium term & other loans.

Further, the Company disbursed a total loan amount of Rs 75,666.95 crore in the financial year 2019-20. The same included Rs 27,490.87 crore towards generation projects, Rs 5,699.09 crore towards renewable energy projects, Rs 30,856.19 crore towards T&D projects, Rs 6,390.00 crore towards short term, medium term & other loans and Rs 5,230.80 crore of counter-part funding under DDUGJY including DDG (Decentralized Distributed Generation) and SAUBHAGYA schemes. Further, grant/subsidy of Rs 6,473.88 crore provided by the Government of India was also disbursed to various states/implementing agencies during the financial year 2019-20 under the DDUGJY, DDUGJY-DDG and SAUBHAGYA schemes.

Recent developments

Oct 16 2020; REC infuses liquidity to the tune of Rs. 2790 crore. 5

State-run REC Limited, one of India’s premier NBFCs, has sanctioned Rs. 2790 crore to Jammu Kashmir Power Corporation Limited (JKPCL). The two parties on Friday signed an agreement for the liquidity infusion scheme under the Aatmanirbhar Bharat Abhiyan for the Union Territory of Jammu and Kashmir. The agreement was signed between the Govt. of Jammu & Kashmir, JKPCL, REC and PFC in the presence of Principal Secretary Shri Rohit Kansal - PDD, Jammu & Kashmir. Shri Sanjeev Kumar Gupta - CMD, REC Limited and other senior officials from REC joined the meeting through video conferencing.

During these difficult times, financial assistance under the scheme will allow Discoms to fully discharge their dues to Gencos & Transcos for the electricity purchased and transmitted. On 13th May 2020, Government of India announced infusion of liquidity of Rs. 90,000 crores to discoms through PFC and REC as a part of the Aatmanirbhar Bharat Abhiyan. Under this intervention, REC and PFC is extending financial assistance at a concessional rate of interest. Till date, REC and PFC have sanctioned Rs. 1.08 lakh Crores and released nearly Rs. 30,000 Crores to Discoms under the scheme.

Nov 06 2020; REC declares its Quarterly Financial Results for Q2 and H1 FY21. 6

The Board of Directors of REC Limited approved the audited standalone and consolidated financial results for Q2 & H1 FY21 today.

Operational and Financial Highlights – Q2 FY21 vs Q2 FY20 (Standalone)

Sanctions - Rs. 67,961 crore vs. Rs. 41,300 crore, up 65%

Disbursements - Rs. 28,826 crore vs. Rs. 17,981 crore, up 60%

Total Income – Rs.  8,791 crore vs. Rs. 7,601 crore, up 16%

Net Profit – Rs. 2,190 crore vs. Rs. 1,307 crore, up 68%

On the back of healthy operational performance during the quarter, the company has clocked its all-time highest quarterly profit of Rs. 2,190 crore during Q2 FY21, as against Rs. 1,307 crore during Q2 FY20. The company has registered Earnings Per Share (EPS) (annualized) of Rs. 44.36 for the quarter ended 30th September 2020 as against Rs. 26.47 per share during the same quarter last year.

The loan book has reflected a growth of 16% while growing from Rs. 3.01 lakh crore as on 30th September 2019 to Rs. 3.49 lakh crore on 30th September 2020. The strong financial performance has pushed the book value above Rs. 200, as the Net Worth of the Company as at 30th September 2020 is Rs. 40,259 crore. The Capital Adequacy Ratio of the Company has also improved sequentially to 18.35% as on 30th September 2020 which will help in sustaining the growth momentum for the Company.

With no incremental slippages and sustained trend of resolutions, the Net Credit-impaired assets have reduced to 2.04% as on 30th September 2020, as against 2.88% as on 30th June 2020. The Provisioning Coverage Ratio of the Company has also improved to 60.94% as on 30th September 2020, as against 52.89% during Q1 FY21. Continuing the tradition of rewarding its shareholders, the Board of Directors of the Company also declared an interim dividend of Rs. 6 per share of Rs. 10 each. The record date for such interim dividend has been fixed at 17th November 2020.

Talking about the results, Mr. Sanjeev Kumar Gupta, Chairman and Managing Director, said, “A strong growth in the sanctions has further cushioned its healthy order book. Inspite of the challenging times, the Company has been able to sustain healthy financial performance, while also continuing with the progress in the stressed assets’ resolution.”


  1. ^ https://www.recindia.nic.in/corporate-profile
  2. ^ https://www.recindia.nic.in/business-profile
  3. ^ https://www.recindia.nic.in/financial-products
  4. ^ https://www.recindia.nic.in/uploads/files/Annual-Report-2019-20.pdf
  5. ^ https://www.recindia.nic.in/rec-infuses-liquidity-to-the-tune-of-rs-2790-crore
  6. ^ https://www.recindia.nic.in/rec-declares-its-quarterly-financial-results-for-q2-and-h1-fy21
Created by Asif Farooqui on 2020/11/23 15:07
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