State-owned key lender to power sector Rural Electrification Corporation (REC) reported 30 per cent decline in standalone net profit to Rs 1,214.66 crore in the second quarter ended September 30, 2017 owing to lower revenues. The company's standalone net profit was Rs 1,751.27 crore in the quarter ended September 30, 2016.
The total revenue of the company decreased to Rs 5,627.71 crore in the second quarter from Rs 6,108.55 crore in the same period last financial year. The interest income of the company has declined to Rs 5,371.05 crore in the September quarter from Rs 5,755.86 crore in the year-ago period.
"The company has overcome the stagnation caused by early prepayment by the Centre's Ujwal Discom Assurance Yojana (Uday) and expects growth in business in the coming months," said P V Ramesh, CMD, REC.
The company's half-yearly profit till September 30, 2017 also declined by 20 per cent to Rs 2,515.80 crore from Rs 3,172.13 crore in the corresponding quarter last year. The total revenues for the H1FY17 declined to Rs 11,289.87 crore from Rs 12,159.28 crore in the same period previous financial year.
Explaining the decline, Ramesh said, "The high-cost capital that was borrowed by us was prepaid without any penalty.
We had to lend that to keep our wheels moving. Necessarily there is certain compression in the returns. As far as the Uday prepayments are concerned, we have now disbursed all the Rs 45,000 crore prepaid to us."
He added that the company is looking at increased investment in power distribution and transmission, including the rural household electrification scheme SAUBHAGYA. Ramesh said.
"The momentum of growth continues to progress in terms of sanctions, disbursements and we have ably contained the NPAs," he said adding, "We see further acceleration in coming months. Our capex investment is picking up," said Ramesh.