REC to raise up to Rs 37,000 cr in FY14

Funds raised by REC is used in the financing and promotion of power generation, transmission and distribution

Rural Electrification Corporation (REC), a leading state-run infrastructure finance company in the power sector, is planning to raise Rs 35,000-37,000 crore in the current financial year compared with a borrowing of Rs 31,000 crore in the last financial year.

“We will raise about Rs 35,000-37,000 crore this financial year and this includes Indian as well as foreign fund raising. The abroad fund raising may be about Rs 5,000 crore,” said Ajeet Agarwal, director (finance). The funds raised are used in financing and promotion of power generation, transmission and distribution, including renewable energy projects.

REC hit the Street on Tuesday with a private placement bond issue worth Rs 4,300 crore. “The tenure of these bonds are 10 years and the coupon rate is 8.82 per cent. The issue is open till Friday,” said Agarwal. Domestically, REC raises funds by way of private placement of bonds, commercial papers and tax-free bonds. In the previous financial year, REC had raised Rs 2,700 crore by way of tax-free bonds. Even in the current financial year, this route of fund raising will be tapped. However, tax-free bond issues did not meet much success in the previous financial year due to which companies had extended the last date of subscription of these bonds and had also come up with a second tranche.

According to Agarwal, the foreign fund raising will be by way of external commercial borrowing (ECB). “We will apply to Reserve Bank of India for permission to raise about $750 million to $1 billion by way of the ECB route. However, we may not go for ECB before the second quarter,” said Agarwal. Generally REC goes for ECB worth $750 million every financial year.