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Power Finance Corporation Ltd.

BSE: 532810 Sector: Financials
NSE: PFC ISIN Code: INE134E01011
BSE 14:47 | 05 Dec 138.45 -0.85
(-0.61%)
OPEN

139.50

HIGH

140.85

LOW

138.30

NSE 14:29 | 05 Dec 138.60 -0.70
(-0.50%)
OPEN

139.50

HIGH

140.90

LOW

138.35

OPEN 139.50
PREVIOUS CLOSE 139.30
VOLUME 256116
52-Week high 140.85
52-Week low 97.15
P/E 3.62
Mkt Cap.(Rs cr) 36,552
Buy Price 138.45
Buy Qty 182.00
Sell Price 138.60
Sell Qty 3401.00
OPEN 139.50
CLOSE 139.30
VOLUME 256116
52-Week high 140.85
52-Week low 97.15
P/E 3.62
Mkt Cap.(Rs cr) 36,552
Buy Price 138.45
Buy Qty 182.00
Sell Price 138.60
Sell Qty 3401.00

Power Finance Corporation Ltd. (PFC) - Chairman Speech

Company chairman speech

Ladies and Gentlemen

Welcome to the 36th Annual General Meeting of your company.

The pandemic had a significant impact on a wide range of businesses andindustries in the last two years. Our economy is gradually emerging from its debilitatingimpact with the revival of consumption demand and easing of supply chain constraints.Power demand has also surpassed the pre pandemic highs with peak demand hitting newlifetime highs in 2022. However the war in Ukraine and comeback of inflation after almosta decade have posed a new set of hurdles to the global economic recovery. With prices offuel and other commodities especially of food items remaining volatile inflation islikely to remain elevated in the near term. Under these unusual circumstances yourcompany was able to measure up to the challenges and deliver excellent results.

PFC is now a Maharatna Company

During the year your company was conferred 'Maharatna' status by Govt.of India the highest recognition for a public sector company. This is an endorsement ofPFC's enhanced stature and an acknowledgement of its sterling role in turning a powerdeficit country into a power surplus state with universal access to electricity. Maharatnastatus will give PFC greater operational and financial autonomy and enable diversificationof its operations to further accelerate its business growth.

Operational & Financial Performance

I am pleased to announce that during FY 2021-22 we have delivered thehighest ever net profit of Rs 10022 crore up 19% from the previous fiscal. On aconsolidated basis the company earned net profit of Rs 18768 crore a 19% increase fromFY 2020-21. At the end of the fiscal year PFC's loan assets stood at Rs 3.73 lakh croreon standalone basis and Rs 7.59 lakh crore on consolidated basis. The Net Worth of yourcompany was Rs 59350 crore as on 31.03.2022 and the Capital to Risk Weighted Assets Ratiowas at a healthy level of 23.48% with Tier I capital ratio of 20.00%. To reward ourshareholders PFC has declared a total dividend of 120% i.e. Rs 12 per share during FY2021 -22 which is the highest pay out in the history of PFC.

On asset quality front your company continued the steady improvementwith net NPAs at 1.76% the lowest level in the past 6 years. Stressed assets worth Rs2787 crore were resolved including Essar Power MP RS India Wind Energy & GVK Ratle.Two other projects namely Sout East UP Transmission and Jhabua Power are in advancedstages of resolution in NCLT.

Your company took various measures to reduce the cost of borrowing andas a result the cost of funds reduced by 18 bps in FY 2021-22 to 7.30%. In September2021 PFC issued its first ever Euro Green Bonds amounting to EUR 300 million at a couponof 1.841%. This was the first ever Euro denominated Green bond issuance from India and thebonds are listed on the Singapore Stock Exchange India INX and NSE IFSC. The funds raisedunder Green bonds have been utilized to finance renewable energy projects in line withPFC's Green Bond Framework. The company also increased its 54 EC Bond mobilisation by 1.5times in FY 2021-22 compared to the previous fiscal. These bonds have a low coupon of 5%and are an important source of low cost funds. PFC continues to enjoy the highest domesticcredit ratings for its long term and short term borrowing programmes. The company'sinternational credit ratings continue to be Baa3 and BBB- which is at par with thesovereign rating of India.

Power Sector Reforms

Your company plays a developmental role in the Indian power sector andis designated by the Government of India as the nodal agency for implementation of variousschemes in the sector. The R-APDRP and IPDS schemes which resulted in strengthening ofpower distribution systems in urban areas were successfully closed during the year. Theschemes involved execution of about 2000 projects across India involving totalexpenditure of about Rs 60000 crore.

Roll out of the Revamped Distribution Sector Scheme (RDSS) isprogressing smoothly with enthusiastic participation by the states. Till now more than 20States and UTs have got their reform action plans approved under the scheme. Whenimplemented by 2024-25 the scheme will restrict pan India level AT&C losses to 1215%and reduce the ACS-ARR gap to zero which would bring about a marked improvement in theviability of the power distribution sector.

In order to address the issue of mounting dues of power distributioncompanies to generators and transmission companies Government of India has introduced theElectricity (Late Payment Surcharge and Related Matters) Rules 2022. PFC has extendedfinancial assistance to various distribution companies under the rules to clear theiroutstanding dues. PFC shall also act as the nodal agency to monitor implementation ofthese rules which have provisions to prevent accumulation of dues in the future. Thiswould ease the financial position of power generation and transmission companies and willimprove investors' confidence in the sector.

Your company has been publishing performance report on state powerutilities on an annual basis and is also the co-ordinating agency for Integrated Ratingexercise carried out as per framework approved by Ministry of Power. The 10th IntegratedRating & Ranking of Power Distribution Utilities marked a new milestone with theinclusion of Private Distribution Utilities and Power Departments covering a total of 71utilities across India. These reports are widely used by stakeholders including utilitiespolicy makers developers lenders equity analysts and regulators for decision making.

Leading the Fight on Climate Change

Shift in energy consumption to cleaner and green options will play asignificant role in economic growth globally. During the COP 26 summit held in Glasgow inOctober 2021 India has substantially enhanced its climate change mitigation goals. Ourcountry would follow a five-pronged strategy named 'Panchamrita' for phased reduction ingreenhouse gas emissions culminating in net Zero emissions by the year 2070. As part ofthe strategy intermediate targets have been set for achieving 500 GW non-fossil fuelgeneration capacity by 2030 and meeting 50% of our energy requirement from renewableenergy sources. These targets though quite steep can be achieved through collaborationbetween domestic private state-owned and foreign players.

The Ministries of Power and New & Renewable Energy have rolled outa slew of reforms to push mainstreaming of energy from green and sustainable sources andachieve the 500 GW target. Towards this end thermal power generators have been allowed toset up renewable energy capacities on their own or through dedicated developers and tosupply it to the consumers under the existing PPAs. Bundling of thermal and renewableenergy sources will also benefit the customers with power getting cost effective whileimproving the profitability of energy companies.

Your company is already playing a significant role in India's energytransition effort. PFC has supported renewable energy capacity addition of 18 GW which is16% of the country's installed renewable capacity. During the last fiscal 44% of thedisbursement made by PFC to the generation sector was to non-fossil fuel projects. PFC'srenewable energy assets grew at a CAGR of 32% in the last 5 years compared to 9% growthin total loan assets.

The upward revision in green energy targets would fuel expansion of thegreen energy financing market and would demand innovative financing models. According tovarious estimates the fund requirement to meet India's net zero target is about US$ 10trillion a large part of which is to be deployed in the energy sector. Your company beinga major financier of the sector would play a key role in channelizing this investment.

Corporate Governance & Social Responsibility

Good corporate governance is essential to ensure transparency and toboost stakeholder trust and confidence. Being a listed company PFC complies with allapplicable provisions within its ambit relating to corporate governance as stipulatedunder the Companies Act 2013 SEBI (Listing Obligations & Disclosure Requirements)Regulations DPE Guidelines etc. Your company maintains the highest standards oftransparency accountability and adequate disclosures.

Being a socially responsible entity PFC has put its CSR andsustainability policy into practise with utmost sincerity. I am proud to state that PFC'scumulative CSR spending has surpassed Rs 1000 crore to date. PFC has a Board-level CSR& SD Committee of Directors which is led by an Independent Director in place tooversee the activities of CSR. PFC has taken a wide range of initiatives in the areas ofhealthcare sanitation & drinking water skill development and environmentalsustainability. In addition PFC has made contributions to the thematic areas of healthand nutrition with a special focus on COVID-related measures including setting upmakeshift hospitals and temporary COVID Care Facilities with a preference for aspirationaldistricts. Your company shall remain a socially conscious entity committed to enhancingthe standard of living of our society through projects for sustainable development with aprimary focus on meeting the society's need for power and energy.

Diversification & Way Forward

In order to sustain the growth momentum your company has diversifiedinto funding infrastructure projects in irrigation waste to energy and water treatmentsectors and also into new and emerging sectors like e-mobility utility scale energystorage etc. Taking the initiative forward PFC has recently sanctioned financialassistance to projects in infrastructure sectors including metro rail petroleum refiningbio ethanol manufacturing and nuclear energy. With your company's growing balance sheetsize diversification into newer infrastructure areas is expected to gather steam in thecoming years.

Acknowledgement

I convey my sincere gratitude to our shareholders who have reposedfaith in us. I am grateful to the Hon'ble Union Minister of Power New and RenewableEnergy Hon'ble Minister of State for Power and the officials of Ministry of Power fortheir support and guidance. I also thank the Board of Directors our client utilitiesemployees various ministries government departments and other stakeholders of PFC fortheir continued support.

R. S. Dhillon
Chairman & Managing Director

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