REC awaits FinMin views on Rs 5,000-cr FCCB proposal

Rural Electrification Corp (REC) is awaiting the response of the finance ministry on its proposal to raise $1 billion (Rs 5,000 cr) through the issue of Foreign Currency Convertible Bonds (FCCBs).

"The Ministry of Power has sent it (the FCCBs proposal) to the Ministry of Finance... We are the first in the public sector to come up with the proposal of FCCBs," a top REC official said.

The company plans to mop up around Rs 30,000 crore in the current fiscal. Of that, around $1.5 billion (about Rs 7,350 crore at current rupee/$exchange rate) would be raised from international markets.

State-owned REC provides financing for various power projects, mainly for rural areas.

"We are financing for the power sector and we have to maintain our capital adequacy ratio. So, we have to raise the equity. This (FCCBs) is the best option," the official said.

As part of the fund raising plan, the company will sell $200 million worth Swiss franc bonds. The issue, which has been delayed due to volatile global markets, is expected to happen later this month or in early November.

The mandate for the Swiss franc bond issue has been given to four banks -- UBS, Credit Suisse, RBS and Deutsche Bank.

Helped by better financial management, REC saw its profit climb 13% to Rs 662 crore in the April-June quarter this fiscal compared to the same period a year ago.