A Look at REC Limited

As a Maharatna CPSU and a leading NBFC, REC is determined to contribute to country’s journey towards achieving net-zero emissions by 2070 by continuing as government’s strategic partner to finance power sector and also by capitalizing on the thrust on energy transition by the Government and financing upcoming renewable energy projects (solar, wind, biomass, hydro); funding of solar parks, solar SEZ, solar pump-sets, energy storage systems, EV’s / charging infrastructure, etc.

In light of broadened mandate, REC has already started to explore/finance sub-sectors like Airports, Metro Rail, Highways, Green Hydrogen/Green Ammonia, Multi-Modal Logistics Parks, Cold Chains, Ports, Healthcare Infrastructure, etc. This diversification of the lending portfolio has enabled the company to reduce dependence on the power sector and mitigate risks associated with the sector. Notwithstanding above, REC is committed to driving innovation, promoting a culture of excellence and fostering collaboration with stakeholders to achieve the company’s goals.

REC has been instrumental in fulfilling the Government of India’s target of electrifying unelectrified villages and universal household electrification as a nodal agency for the Deen Dayal Upadhyaya Gram Jyoti Yojana and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana – SAUBHGYA Scheme, as a result, the country has achieved the target of providing access to electricity to all households.

As the power sector enters a phase of modernization, technological advancement and consumer-centric focus, we are honored to be associated with ₹3 lakh crore reforms-based and results-linked Revamped Distribution Sector Scheme (RDSS) of the Government, a significant step in this transformative journey. REC is also providing counterpart funding to various schemes of Government of India being implemented for transformation of Indian Power Sector. Further, we take immense pride in contributing to the foundation of Ujjwal Bharat, fostering a brighter and more prosperous India.

RENEWABLE ENERGY FOCUS

REC’s Loan book in Renewable Energy space has grown from ₹7,506 Cr i.e. 3% of REC loan book of ₹2.39 Lakh crore in FY 2017-18 to ₹ 29,073 Cr i.e. 7% of REC loan book of ₹ 4.35 Lakh crore in 2022-23. REC has targeted to increase RE Portfolio to ₹ 3 lakh Cr by FY 2030.

REC is looking forward to financing the entire RE power value chain. REC RE financial assistance includes Projects viz. Wind, Solar, Hybrid, Round the Clock (RTC), E-Bus, Pumped Storage Projects (PSP), Solar Cell and Module manufacturing, Waste to Energy Projects, Projects under KUSUM Scheme etc.

Furthermore, we are actively pursuing financing of Green Hydrogen and Ammonia, Ethanol production and open to new and upcoming Technology based initiatives in Green space. These technologies hold immense potential in terms of energy storage, decarbonization, and reducing reliance on traditional fossil fuels. REC recognizes their importance and is committed to supporting these Projects in the near future. Aggressive efforts in this direction would reduce the cost as well as demand for fossil fuel to create a sustainable and thriving planet for future generations.

CORPORATE SOCIAL RESPONSIBILITY

During the financial year 2022-23, REC continued its commitment to socially beneficial projects through CSR initiatives. With a focus on national developmental issues, REC spent a noteworthy over ₹210 crore on various thematic areas surpassing the minimum requirement set by statutory provisions. We have covered a wide range of activities viz., health & sanitation, education, rural development, skill development, entrepreneurship programmes etc. Embracing inclusive development, REC sponsored health and nutrition projects in aspirational districts like Gajapati in Odisha, Mamit in Mizoram, Kiphire in Nagaland, Muzaffarpur in Bihar, Udham Singh Nagar in Uttarakhand, Chandel in Manipur and West Sikkim in Sikkim.

REC supported National Sports Development Fund (NSDF) through Sports Authority of India for an amount of ₹100 crore over a period of three years covering Athletics, Badminton and Boxing which also includes Target Olympic Podium Scheme (TOPS). Identifying and nurturing young talents to win medals for the country, is one of the objectives of this scheme.

FINANCIAL & OPERATIONAL PERFORMANCE

During the financial year 2022-23, REC delivered an outstanding performance on all fronts with exceptional growth in loans sanctioned from ₹54,421 crore in 2021-22 to ₹2,68,461 crore in 2022-23, translating a growth of 393%. There was all round growth in all the segments comprising of conventional generation, renewable energy and Transmission & Distribution, etc.

The key performance highlights of REC during the year 2022-23 are as under:

– Highest ever disbursements in financial year 2022-23; up by 51% to ₹96,846 crore with additional disbursement of subsidy of ₹1,066 crore under various Government schemes;

– Highest ever net profit of ₹11,055 crore; up by 10% with EPS increasing to ₹41.85 per share of ₹10/- each

– Net Worth increased by 13% to ₹57,680 crore with return on equity of 20.35%;

– Low levels of Credit Impaired Assets (Stage III), with Gross and Net Credit Impaired Assets of 3.42% and 1.01% respectively and the credit cost stood at ₹115 crore translating to 0.03%;

– Capital Adequacy ratio of 25.78%, against minimum statutory requirement of 15%, implying ample opportunities to support the future growth;

– Maintained highest domestic rating of “AAA” for domestic debt instruments from each of the four rating agencies i.e. CRISIL, ICRA, CARE and India Ratings and Research; and

– Internationally, REC enjoys rating at par with India’s sovereign rating of “Baa3” and “BBB” from Moody’s and Fitch, respectively.

MoU RATING & AWARDS

During the financial year 2022-23, REC garnered several accolades and recognitions, including the prestigious “Maharatna” status for Company’s operational efficiency and financial strength. The performance of the Company in terms of MoU for the financial year 2023 is likely to be excellent, subject to final evaluation by DPE.

The company was also honored as the ‘Best PSU’ in the Financial Services category and ‘Best Navratna’ by Dun & Bradstreet for financial year 2021-22. Further, it received the Golden Peacock Award for Excellence in ‘Corporate Governance,’ the ‘Best Public Sector IT Project’ award at the Technology Excellence Awards 2022 and the ‘Operational Performance Excellence’ recognition at the 12th PSE Excellence Awards. Additionally, REC’s commitment to environmental sustainability was also acknowledged with the Green Ribbon Champions Award.

THE PATH AHEAD

India’s growth momentum looks bright in 2023-24 in an atmosphere of easing inflationary pressures as RBI has projected 6.4% real GDP growth for financial year 2023-24.

Even as the country has achieved the highest population mark in the globe, it has the youngest human resources in the world to propel the future growth. A recently published report by EY, “India@100″estimates that through 2047, which is the “AmritKaal” period, India’s economy shall continue to grow in the range of 6-6.4%, by when India would become a US$26 trillion economy.

Energy transition to clean and green energy, is expected to lead to large investments in the power sector in the country, thus enabling a promising future for REC. At COP26 in Glasgow, UK in November 2021, our Hon’ble Prime Minister announced about India’s aim to achieve net-zero emissions by 2070. Furthermore, in August 2022, India updated its intended Nationally Determined Contribution (NDC) as part of the Paris Agreement (2015), by committing to reduce the Emissions Intensity of its GDP by 45% from 2005 levels and achieving about 50% installed capacity from non-fossil fuel-based energy resources by 2030.

For the next 10 years, the latest National Electricity Plan (Generation expansion planning) has estimated that the installed capacity by the end of financial year 2026-27 shall reach 610 GW with 57% non-fossil capacity and by financial year 2031-32 it is expected to reach 900 GW with 68% non-fossil share. This corresponds to fund requirement of ₹33.60 lakh crore by 2032 for generation sector alone. Of this ₹14.54 lakh crore is estimated for the five-year period during financial year 2022-27 and remaining ₹19.06 lakh crore for subsequent five years. REC is going to play a vital role in fulfilling this huge funding opportunity in the power sector by targeting to finance at least Rs. 3 lakh crore for Green projects.

(A marketing initiative by Open Avenues)