REC may post net profit of Rs 1,900 cr in FY10

Rural Electrification Corp (REC) today said it may post a net profit of over Rs 1,900 crore in 2009-10 fiscal and the same may rise further by 21-23 per cent in the current fiscal.

"Net profit according to provisional estimates is likely to rise over 50 per cent to Rs 1,900 crore in 2009-10," REC Director (Finance) H D Khunteta told reporters here. Revenues are expected to grow over 25 per cent to Rs 6,800 crore, he said.

Khunteta said net profit of REC is expected to rise 21-23 per cent during the current financial year that started April 1. Revenues may increase 22-25 per cent in 2010-11. Rise in income was mainly because of higher income from disbursements to power projects.

 

"In 2009-10, we disbursed loans worth Rs 21,100 crore, in 2010-11 we are targeting around Rs 25,000 crore on a conservative basis. We are expecting higher demand from transmission and distribution sector in 2010-11 and 2011-12," Khunteta said.

REC currently has a loan book of around Rs 67,000 crore, including 84 per cent to state-owned projects. REC, he said, plans to raise about Rs 26,000 crore in debt this fiscal. The firm had raised Rs 24,000 crore in loans last fiscal.

The loans which REC raises are channelised to power projects particularly in rural areas. Khunteta said the current year's borrowing also includes a plan to raise $500 million as external commercial borrowings by September.

"Our RBI approval for the ECB is valid till September 2010. We will take a final decision on going for ECB in 1-2 months," he said. The Reserve Bank of India (RBI) had approved REC's ECB almost two years ago but the company did not go for the overseas borrowing owing to bad market conditions.

"The market condition have improved since September last year and interest rates currently are also low," he said, indicating REC's willingness to go for ECB.