REC gains after board OKs borrowing 94,000 cr in FY20

REC rose 1.74% to Rs 85 after the company said its board has approved a proposal to revise upward its borrowing for the current financial year to Rs 94,000 crore from the Rs 90,000 crore estimated earlier.

Besides, the board has also approved an Rs 1.10 lakh crore market borrowing by the company during the next financial year 2020-21, the company said in an exchange filing made after market hours yesterday.

The board in its meeting on Wednesday an approved upward revision in the market borrowing programme for the financial year 2019-20 from Rs 90,000 crore to Rs 94,000 crore, a rise of Rs 4,000 crore in raising funds through domestic bonds, debentures, rupee term-loan, and external commercial borrowing among others, to be raised during the balance period of 2019-20.

The funds under the market borrowing programme for FY 2020-21 will be raised during the next financial year, with the approval of the competent authority, the company said.

The board also approved the launch of capital gains tax exemption bonds (Series XIV) under Section 54EC of the Income Tax Act, 1961, for raising funds on a private placement basis for an amount of Rs 2,500 crore with a green shoe option to retain oversubscription. The said bonds are in the nature of secured debentures of the face value of Rs 10,000 each. The issue will open on April 1, 2020, and close on 31 March 2021.

On a consolidated basis, the public sector enterprise reported 29.81% rise in net profit to Rs 1666.81 crore on a 13.69% increase in net sales to Rs 7533.80 crore in Q3 December 2019 over Q3 December 2018.

REC is a public sector infrastructure finance company in India's power sector. The company provides loan assistance to various state and central power utilities, private sector project developers, and state governments for investments in power generation, transmission, distribution, and other system improvement schemes.

Government of India held 52.63% stake in the company as on 31 December 2019.

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