Our successful listing gives justice to RE growth in India: IREDA CMD

'The company is now trying to widen its scope to new and emerging green sectors, widen its borrowers base, use innovative financing tools to cater to large projects and become a Navratna soon'

The Indian Renewable Energy Development Agency (IREDA) is India’s only renewable energy-focused state-owned non-banking financial company. After existing for three decades and two failed attempts at an initial public offering (IPO), the IREDA made a debut on Dalal Street last week. Even as the renewable-energy sector has grown by leaps and bounds, the loan books of the IREDA have remained restricted during the past decade. The company is now trying to widen its scope to new and emerging green sectors and expanding its borrower base, use innovative financing tools to cater to large projects, and become a Navratna soon. P K Das, chairman and managing director, in an interview with Shreya Jai talks about the growth plans of the company after its IPO. Edited excerpts:

The third attempt at an IPO proved lucky for the IREDA. What was different this time?

Our team was confident of our plan. This is not just the IREDA’s IPO. It is the success of the ministry of new and renewable energy and of the renewable energy (RE) industry. Over the past three-four years, we have tried to build a fair amount of capabilities, especially with regard to quality corporate governance and RE development. After the IPO of the Life Insurance Corporation, we are the first public sector undertaking (PSU) to go for listing. Our success will put a stamp on the perception of PSUs in the pipeline for an IPO, follow-on public offering, etc. We wanted to remove the misconceptions around RE and the IREDA. We have been working silently and efficiently for the past 36 years but were not known beyond our lenders and borrowers. With the successful listing, we would be getting a much better and wider brand name and it will be true justice to the development of RE in the country.

In five years, how have your loan books grown and which sectors are part of your portfolio?

During the past three decades, the IREDA has been supporting all forms of RE -- solar, wind, hydro -- and even newer technologies such as biofuel and electric mobility. In March 2020, our loan book size was Rs 23,000 crore. In the past three years we have added another Rs 24,000 crore. By September this year, our loan books reached more than Rs 47,000 crore. Plain vanilla RE comprises 62 per cent of our loan books (30 per cent solar, 20 per cent wind, and the rest hydro). We have around 25 per cent of our loan books for state utilities and 18 per cent in emerging RE. There has been a fair amount of thrust on RE after 2014 by the new government at the Centre. We are a kind of a mother organisation for financing RE in India and hence our goals are the same as the targets set by the country. The 500-Gw RE target by 2030 would require at least Rs 30 trillion and Rs 40-45 trillion when e-mobility is added to it. Government NBFCs -- Power Finance Corporation (PFC), REC, and the IREDA -- will play a key role in RE development.

PFC, REC and large banks have a natural advantage both in borrowing and lending. How do you plan to compete, given that your lending ceiling is lower than theirs?

All multilateral agencies have handheld RE in its initial stages. Since the 1990s the IREDA has had a line of credit with a lot of such agencies and our relations with them have grown over time. In the past three years, we did not borrow abroad. We could raise funds from the domestic market. In September, our company was upgraded to Schedule A, and recently the ministry made a pitch for getting us “Navratna” status. The benchmark we have set for ourselves in best quality corporate governance will benefit us. We are the only company in this segment which is doing quarterly audits. We have an edge over any agency in this segment now. We are going to get the best sources of funds at the most competitive rates. Most lending agencies enjoy 54EC (of the Income Tax Act, bonds with capital gains tax exemption). We have placed requests for it and are hopeful we will be considered. We are hopeful that the green taxonomy, for which we submitted a white paper, will be notified soon. One major benefit will be investment by insurance funds, pension funds, etc.

The size and scale of RE projects are growing. The new sectors require high upfront debt. How do you plan to cater to this need?

We are looking at joint lending with other NBFCs and banks. The idea is after we have fully leveraged our own funds, we can join hands with other lenders, and share our skill sets of the RE sector with them to lend to larger projects. We have signed MoUs with four banks and IIFCL. With Bank of India and Union Bank, we could do one single-day transaction of Rs 4,444 crore with state-owned SJVN Ltd. We can do joint lending also with the other two power NBFCs -- PFC and REC --- in the future. Our developers want us to lead despite the IREDA being in minority lending.