REC looks to up renewable energy exposure to 4-5% by 2022

State-run Rural Electrification Corporation (REC) is targeting to increase the exposure to the renewable energy segment in its total loan book to 4-5 per cent by 2022, a top company official said.

As of March 31, 2018, its total outstanding loan book stood at Rs 2.39 lakh crore, out of which only one per cent, or Rs 3,418 crore, was towards renewable energy.

"Since FY15, the share of renewable energy in the total loan book has been one per cent. However, considering the amount of works undertaken in the renewable energy segment, we believe the contribution towards this sector will increase to nearly 4-5 per cent of our total loan book by 2022," company's chairman and managing director PV Ramesh told reporters here today.

While nearly 45 per cent of the firm's loan book is for generation, 33 per cent is for distribution, 19 per cent for transmission and two per cent towards short-term loans.

The government has already set a target to produce 175 GW of power from renewable energy by 2022. Apart from that, new schemes are being launched for household electrification, railway electrification, electric vehicles, among others.

"These initiatives will need a lot of funds, the demand for which will come from private players. Those will be our target areas for disbursement under the renewable energy segment," he said.

During FY18, the company witnessed a 28 per cent rise in loan sanctions, as it approved Rs 1,07,534 crore worth of loans and disbursed Rs 61,712 crore.

Ramesh said for the current financial year, the company may borrow around Rs 55,000 crore, out of which nearly 60-65 per cent would be through commercial bond market, while the rest will be through foreign currency borrowings (FCBs).

"We have received approval for FCBs till June. Therefore, by the second quarter, we will be able to raise that much amount," Ramesh added.

The company's net non-performing assets (NPAs) stood at Rs 13,612 crore as on March 31, 2018, after making a provision of Rs 3,516 crore.

"The major chunk of additional NPAs is attributable to the revised framework issued by RBI on February 12 for resolution of stressed assets. Though it is not applicable to NBFC per se, as a matter of prudence, loans amounting to Rs 9,591 crore have been classified as NPA in Q4 FY18," he said.

Out of these, nearly Rs 8,000 crore are those which were initially under SDR and S4A, he added.

Among the major borrowers, the accounts under SDR include Lanco Anpara, Gati Infrastructure, DAS Energy (having a 100 MW hydro project), VS Lignite, Rattan India Nasik and Lanco Babandh, while those under S4A include Indiabulls Amaravati and Jhabua Power.

"We are in talks with other lenders to these companies and we are working out on how to recover the loans," Ramesh added.