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REC Ltd.

BSE: 532955 Sector: Financials
BSE 00:00 | 23 Sep 101.35 -2.30






NSE 00:00 | 23 Sep 101.30 -2.35






OPEN 103.50
VOLUME 366300
52-Week high 126.53
52-Week low 82.28
P/E 2.60
Mkt Cap.(Rs cr) 26,688
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 103.50
CLOSE 103.65
VOLUME 366300
52-Week high 126.53
52-Week low 82.28
P/E 2.60
Mkt Cap.(Rs cr) 26,688
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

REC Ltd. (RECLTD) - Chairman Speech

Company chairman speech

Dear Shareholders

It is my privilege to present to you the 52nd Annual Reportof your Company. Despite the challenges posed by Covid-19 pandemic

I am happy to report that your Company has performed impressively onall fronts during the financial year 2020-21.

The pandemic has led to an evolution of human behavior and corporatemanagement. The future belongs to those who can achieve seamless communication reducevertical hierarchies and have robust systems to garner business intelligence. Your Companyis investing keenly in becoming a future-ready organization.

In the energy sector we are witnessing a transition like never before.The demand for electricity is increasing supported by the picking up of economic activityand enhanced electrification in rural areas. There is a clear movement towards greenenergy. The Government is implementing various reforms to make the sector modernefficient and sustainable. These initiatives in the power sector are likely to enhance theconsumer experience and also the overall quality of life.

Your Company has championed 'rural electrification' since itsincorporation in 1969 when it used to energize irrigation pump-sets to support the GreenRevolution. Five decades later your Company's funding illuminates every fourth bulb inIndia. With a consistent track record of serving the power sector your Company remainscommitted to support the reforms agenda of the Government.


The global economy is still weathering the setback caused by Covid-19.Most of the economic activities have been hit by reduced personal interaction uncertaintyabout economic landscape lesser investments changed methods of imparting education andslowdown in the international trade & tourism. It will take some time before tradeand industry resume to their pre-pandemic levels.

The United States was able to avert economic disaster with significantfiscal and monetary policy response. China on the other hand saw a rapid yet unevenrecovery driven by manufacturing and exports. Prospects for emerging market and developingeconomies have been generally marked down for 2021. Eventually the recovery in globaleconomy would be dependent on widespread vaccination and moving ahead with cautiousoptimism.

The Indian economy is also making a steady comeback from the Covidshock with the help of comprehensive policy interventions by the Government. Since theonset of the pandemic the RBI has introduced a slew of measures including moratorium onterm loan instalments deferment of interest on working capital facilities easing ofworking capital financing extension of resolution timelines for stressed assets and assetclassification standstill by excluding the moratorium by lending institutions. Thesemeasures and many other reliefs provided by the Government have helped in easing out thepressure on the economy.

As per the International Monetary Fund (IMF) India is likely to emergeas the world's fastest-growing major economy with growth forecast of 9.5% for thefinancial year 2021-22. IMF also expects India's gross domestic product (GDP) growing by8.5% in the financial year 2022-23. The factors which would play a crucial role insustaining the economic recovery are successful containment of Covid-19 besides continueddiscretionary spending.


As power comes under essential services the impact of Covid-19 on theconsumption of power was limited. Still the sector faced issues like delayed projectexecution schedules pressure on finances and liquidity crunch. The sector withstood thesechallenges with strong policy support from the Government and sectoral reforms.

As of March 2021 the total installed capacity of power stations inIndia stood at 382 GW. The focus is gradually shifting from conventional sources of powerto renewable energy sources. Financial year 2021-22 may see higher levels of economicactivity thereby increasing the demand for power. At the same time uncertainty owing tothe pandemic and restrictions on movements across regions may pose a risk to the demandfor power.

In the past few years the transmission sector has witnessed anunprecedented growth with private players enacting an important role in achieving thecountry's grid expansion targets. Transmission utilities at the Centre as well as Statelevel are expected to invest significantly in new technologies to make the grid morereliable resilient secure and smart.

The distribution sector has witnessed several reforms in the last fewyears aimed at bringing competitiveness and efficiency in the sector. India has alreadykick-started the process of privatization of its power distribution companies in unionterritories. This would usher in more competition forcing discoms to improve theirperformance standards and adopt a more consumer-centric approach.

In May 2020 the Central Government announced a liquidity infusionscheme for discoms under Atmanirbhar Bharat in the backdrop of the pandemic. Under thisscheme REC and PFC have extended special long-term transitional loans at concessionalrates to discoms against their receivables from State Governments in the form ofelectricity dues and subsidy not disbursed to enable them to clear their outstanding duestowards central public sector undertakings generation & transmission companiesindependent power producers and renewable energy generators.


Your Company is the nodal agency for Deendayal Upadhyaya Gram JyotiYojana i.e. DDUGJY a flagship scheme of the Ministry of Power Government of Indialaunched in December 2014 covering all aspects of rural power distribution facilitatingtowards achievement of Rs.24x7 Power For All' in rural areas of the country throughdefined project components. Your Company is also the nodal agency for operationalizationof SAUBHAGYA scheme i.e. Pradhan Mantri Sahaj Bijli Har Ghar Yojana launched infinancial year 2017-18 for universal household electrification.

It is noteworthy that all census inhabited villages in the countrybecame electrified as on April 28 2018. Further electricity connections have beenprovided to over 2.82 crore households till March 31 2021 under SAUBHAGYA DDUGJY andState Government schemes.

Recently your Company has prepared a Report on Key RegulatoryParameters for all discoms under Power Sector Reform Programme. The report providescompilation benchmarking and comparative assessment of key regulatory parameters givinga comprehensive overview of how the respective power distribution utilities are faring andwhat corrective measures need to be taken.

Under the guidance of Ministry of Power your Company has alsodeveloped a framework for 'Discom Consumer Service Index' whereby discoms are rated basedon the services provided to their consumers such as reliable power supply connectionsand other services metered billing service and fault redressal. The rating is aimed topromote healthy competition amongst discoms and to nudge them to improve their performanceacross relevant areas.

Your Company is also one of the nodal agencies for the RevampedDistribution Sector Scheme a reforms-based and results-linked scheme with an outlay ofRs.303758 crore and a Gross Budgetary Support of Rs.97631 crore from the Government ofIndia over a period of five years i.e. from financial year 2021-22 to financial year2025-26. The scheme seeks to improve the operational efficiencies and financialsustainability of all discoms / power departments excluding private sector discoms byproviding conditional financial assistance for strengthening of supply infrastructurebased on meeting pre-qualifying criteria as well as upon achievement of basic minimumbenchmarks by the discom evaluated on agreed evaluation framework tied to financialimprovements. The scheme aims to reduce the AT&C losses to pan-India levels of 12-15%and ACS-ARR gap to zero by financial year 2024-25.


During the financial year 2020-21 your Company continued to strengthenits policy framework by introduction of new policies and guidelines and revision ofexisting ones. This included policy on deferment of principal instalments and/or interestin shifting of repayment schedule under Covid-19 scheme for special long term transitionloans to discoms under Covid-19 scheme for special loans to discoms within UDAY limitsand scheme for special transition loans to discoms in exemption of UDAY limits.

The Company also introduced and reviewed its policies with respect tofinancing renewable energy projects which included policy for Letter of Undertakingmodification in Renewable Energy Guidelines on grading of state power utilities revisionof project appraisal and entity appraisal guidelines and modification in re-financingpolicy for renewable energy projects.

Further your Company also reduced its interest rate structure acrossthe board in order to align with the market rates and to contribute towards the overallprofitability of the sector.


As a financial institution serving the entire power sector value chainyour Company's key products include rupee term loans and other loans for both public andprivate sector borrowers in the fields of conventional energy renewable energytransmission & distribution and activities having forward or backward linkage withpower projects. In addition to that your Company also acts as the nodal agency or projectimplementing agency for various schemes and programmes of the Ministry of PowerGovernment of India.

During the financial year 2020-21 your Company sanctioned total loanassistance of Rs.154820.87 crore towards various power sector projects/schemes. The sameincluded Rs.39613.53 crore towards generation projects Rs.17171.34 crore towardsrenewable energy projects Rs.19492.75 crore towards T&D projects Rs.60191.36 croretowards liquidity infusion scheme of the Government of India under Atmanirbhar Bharat andRs.4750.00 crore towards other loans including short-term and medium-term loans. Furtheroutstanding dues of Rs.13601.89 crore on which moratorium was extended pursuant to RBIdirective and Board approved moratorium policy are also included in the above sanctions.

During the financial year 2020-21 your Company disbursed a totalamount of Rs.92987.49 crore which included Rs.25929.76 crore towards generationprojects Rs.3265.13 crore towards renewable energy projects Rs.19301.22 crore towardsT&D projects Rs.39115.50 crore towards liquidity infusion scheme of the Governmentof India under Atmanirbhar Bharat and Rs.3900.79 crore towards other loans includingshort term-and medium-term loans besides Rs.1475.09 crore of counter-part funding underDDUGJY DDUGJY-DDG and SAUBHAGYA schemes of the Government of India. Apart from the aboveyour Company also disbursed total subsidy of Rs.4940.62 crore from the Government ofIndia i.e. Rs.4527.01 crore under DDUGJY Rs.25.49 crore under DDUGJY-DDG and Rs.388.12crore under the SAUBHAGYA scheme.


Your Company has performed exceptionally well during the financial year2020-21 on all key performance indicators. Despite Covid-19 your Company has notexperienced any significant impact on its liquidity position owing to strong creditprofile and access to diversified sources of borrowings. Further your Company hasadequate liquidity buffers in the form of working capital and term loan limits fromvarious banks apart from High Quality Liquid Assets.

The Total Operating Income of the Company for the financial year2020-21 was Rs.35387.89 crore as compared to Rs.29765.21 crore during the lastfinancial year. The Profit After Tax and Total Comprehensive Income for the financial year2020-21 were Rs.8361.78 crore and Rs.8818.30 crore respectively as compared toRs.4886.16 crore and Rs.4336.37 crore in the last financial year. Earning Per Share wasalso recorded at a high of Rs.42.34; and Book Value per share reached Rs.219.89 for thefinancial year ended on March 31 2021.

The Gross Loan Asset Book of your Company as on March 31 2021 wasRs.377418.15 crore as against Rs.322424.68 crore as on March 31 2020 which is anincrease of 17%. The Net Worth of the Company also registered an increase of 24% reachingRs.43426.37 crore as on March 312021 as compared to Rs.35076.56 crore as on March 312020. Further the capital adequacy ratio as on March 31 2021 was 19.72% implying theCompany's capacity to support future growth.

The domestic debt instruments of your Company continued to enjoy"AAA" rating the highest rating assigned by CRISIL CARE India Ratings &Research and ICRA-credit rating agencies. Your Company also enjoys international creditrating from international credit rating agencies Moody's and FITCH of "Baa3" and"BBB-" respectively.

Your Company's Credit Impaired Assets (Stage III) continue to be at lowlevels. As on March 31 2021 the Gross Credit Impaired Assets (Stage III) were 4.84% ofthe Gross Loan Assets and Net Credit Impaired Assets (Stage III) were 1.71% of the LoanAssets. Your Company has created a dedicated team to look into the aspect of stressedassets the issues faced in such projects and the resolution of each case throughappropriate means.


As on March 31 2021 the authorized share capital of your Company wasRs.5000 crore comprising of 500 crore equity shares of Rs.10/- each. The issued andpaid-up share capital of the Company was Rs.1974.92 crore comprising of 1974918000equity shares of Rs.10/- each. Power Finance Corporation Limited (PFC) a Government ofIndia enterprise holds 52.63% equity stake in your Company; and the balance shares areheld by the public.


The Board of Directors of your Company had declared an Interim Dividendof Rs.6/- per equity share and 2nd Interim Dividend of Rs.5/- per equity shareof Rs.10/- each for the financial year 2020-21 which have been paid in December 2020 andMarch 2021 respectively.

Further the Board of Directors has also recommended a Final Dividendof Rs.1.71 per equity share of Rs.10/- each which is subject to approval of theshareholders at the ensuing Annual General Meeting. If approved the total dividend forthe financial year 2020-21 would amount to Rs.12.71 per equity share of Rs.10/- eachrepresenting 127.10% of the paid-up share capital of the Company which is higher than thedividend of 110% paid in the last financial year.


Your Company has recently started functioning from its new officebuilding at Gurugram Haryana which houses the Corporate Office of the Company. It is aunique building with a 964 kilowatt peak Solar PV plant at the rooftop. The building hasseveral state- of-the-art features such as fair finish white concrete surfaces raisedflooring radiant cooling for slabs to reduce power consumption of air conditioningIntegrated Building Management System automated sensor-controlled lighting andbio-climatic glass fapade with motorized blinds well-suited for a future readyorganization.


Owing to the pandemic there was an enhanced focus in the last year onemployee well-being. Employees were motivated and supported to work with high levels ofproductivity while maintaining Covid protocols. Trainings and webinars were regularlyconducted not just for upgrading their skill-sets but also to equip them in dealing withhealth issues. Regular interactions were held to build an atmosphere of trust andcooperation.

During the financial year 2020-21 your Company recruited 9 executivesfrom various disciplines. The Company had a strength of 428 employees as on March 312021. The Company focuses on effective deployment of human resources at all levels tomeet the organizational goals.


Your Company has a comprehensive Risk Management Policy covering creditrisk operational risk liquidity risk and market risk. Systematic risk managementprocedures have been laid down to mitigate such risks.

The Company follows structured appraisal process with detailedmethodology to mitigate the credit-risk. Operational risks are managed through acomprehensive Risk Register covering all functional areas. In order to mitigate liquidityrisk there is a mix of strategies including forward-looking resource mobilization basedon projected disbursements and maturing obligations. Further your Company has implementedvarious risk limits to mitigate the market risk.


Your Company is constantly increasing the digitization of its businessprocesses through various IT initiatives. Your Company was the first CPSE in the Indianpower sector to go paperless with implementation of e-office which has now been upgradedto NIC e-office. Your Company has also revamped its e-Business ERP to the latest version;and migrated ERP hardware to private cloud environment at REC Datacenter.

The Company's network and security devices are upgraded with the latesttechnology. A secured VPN network facilitates the users to connect with REC network fromremote locations thereby facilitating seamless operations. Your Company has alsoimplemented a system to prevent data leakage at the Data Centre and Disaster RecoveryCentre so that confidential and critical information is not shared outside the corporatenetwork.


Your Company has a premier institute for power sector training atHyderabad namely REC Institute of Power Management and Training (RECIPMT). Establishedin 1979 RECIPMT caters to the training and development needs of engineers and managersacross various power sector organizations. RECIPMT is also a partner institute with theMinistry of External Affairs Government of India for organizing training programmes forinternational executives.

During the financial year 2020-21 RECIPMT conducted 1250 trainingprogrammes which included National Training Programs sponsored by the Ministry of Powerunder DDUGJY REC-sponsored programmes on topics such as Electrical Safety Sustainabilityof Power Utilities Safety aspects and Energy Management System and Roof-top SolarSystems open-calendar programmes and in-house training sessions for the executives ofREC. These programmes were attended by 28678 participants with achievement of 82420training man-days in total.


Your Company's CSR funds are channelized through 'REC Foundation' asociety registered under the Societies Registration Act. All CSR initiatives are pursuedwith the focus on socially beneficial projects to reach a wide spectrum of beneficiaries.During the financial year 2020-21 REC's CSR activities were carried out in the areas ofsanitation and hygiene promotion of healthcare skill development women empowermentenvironmental sustainability and rural infrastructural development. Further the Companyalso contributed towards improving health services and reducing malnutrition in variousaspirational districts.

Your Company has a well-defined 'Corporate Social Responsibility &Sustainability Policy' in line with the provisions of the Companies Act 2013 and rulesmade thereunder. During the financial year 2020-21 the Company spent a total amount ofRs.147.77 crore towards various CSR projects including an amount of Rs.50 crore towardsPM CARES Fund Rs.6.93 crore towards providing food ration sanitizers masks PPE kitsetc. to migrant workers healthcare workers and disadvantaged people and Rs.0.72 croretowards providing cold chain equipment to store Covid-19 vaccines.


Your Company is committed to adopting and following the best practicesin Corporate Governance. The Company meets all applicable requirements within its ambitunder the Companies Act 2013 SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Guidelines on Corporate Governance for Central Public SectorEnterprises 2010 issued by the Department of Public Enterprises and Secretarial Standardsissued by the Institute of Company Secretaries of India. The Company is also pursuing thematter pertaining to appointment of requisite number of Independent Directors includingWoman Independent Director on its Board with the appointing authority i.e. the Ministryof Power Government of India. It is expected that the requisite number of Directors wouldbe appointed shortly.

During the financial year 2020-21 your Company was conferred the 10thPSE Excellence Award for Corporate Governance from the Indian Chamber of Commerce asrunner-up in the Maharatna & Navratna category.


During the financial year 2020-21 your Company has won various awardsand recognitions including the Best Organization for Women Empowerment at Women AchieversAwards 2020 by Exchange4Media SKOCH Award for Response to Covid Mahatma Award for CSRExcellence 2020 National PSU Excellence Awards in CSR IT Environment & HRcategories and CSR Shining Star Award for Women Empowerment. Further Reputation Today hasrecognized REC's corporate communication team as one of the Top 30 in India.


During the financial year 2020-21 two wholly owned subsidiaries ofyour Company were amalgamated to create a single entity to achieve better synergies inoperations greater access to different market segments and to reap the benefits of highercapital base and pooled resources. The amalgamated entity is now known as REC PowerDevelopment and Consultancy Limited (formerly REC Power Distribution Company Limited"RECPDCL").

RECPDCL is engaged in the businesses of project implementation andconsultancy services in power sector viz. implementation of distribution systemstrengthening works implementation of grid/off-grid solar (PV) projects installation ofsmart meters preparation of detailed project reports third party inspectionspre-dispatch material inspections and acting as project management consultant underState-funded schemes such as DDUGJY IPDS etc.

Further pursuant to the amalgamation RECPDCL also acts as "BidProcess Coordinator" for selection of Transmission Service Providers through TariffBased Competitive Bidding (TBCB) process for independent inter-state and intra-statetransmission projects assigned by the Ministry of Power and State Governments from time totime. In order to initiate development of each independent inter-state / intra-statetransmission project RECPDCL incorporates a project specific Special Purpose Vehicle(SPV) as its wholly owned subsidiary which also becomes wholly owned subsidiary of REC.After selection of the successful bidder in accordance with TBCB Guidelines suchsubsidiaries are transferred to the successful bidder along with all assets andliabilities.

During the financial year 2020-21 RECPDCL recorded an income ofRs.184.69 crore as compared to income of Rs.222.18 crore in the previous financial year.The Profit After Tax for the financial year 2020-21 was Rs.25.62 crore as againstRs.66.91 crore in the previous financial year. Further the Net Worth of RECPDCL as onMarch 312021 was Rs.297.99 crore as against Net Worth of Rs.280.80 crore as on March 312020.

REC's joint venture company viz. Energy Efficiency Services Limited(EESL) with three other power sector PSUs is doing pioneering work in the field of energyefficiency. EESL is formed to create and sustain market access of energy efficienttechnologies particularly in the public facilities like municipalities buildingsagriculture industry etc. and to implement several schemes of Bureau of EnergyEfficiency Ministry of Power Ministry of New & Renewable Energy Government ofIndia. EESL is also leading the market-related activities of National Mission for EnhancedEnergy Efficiency (NMEEE) one of the eight national missions under National Action Planon Climate Change (NAPCC). REC has contributed Rs.218.10 crore (22.18%) towards thepaid-up equity share capital of EESL.

Based on the provisional financial statements of EESL for the financialyear 2020-21 its turnover for the year was 1471.85 crore (on standalone basis). Furtherthe Profit Before Tax and Profit After Tax for the year were ?43.96 crore and ?32.87 crorerespectively.


While Covid-19 pandemic has presented several challenges for thebusiness and industry it has also presented several opportunities for improvement in thepower sector. The outcome and reform-linked financial package of more than ?3 lakh crorefor discom infrastructure upgrade is a forward-looking plan which would assist indevelopment of the distribution sector. The proposal to let consumers choose theirelectricity supplier would unleash competition and help improve efficiency as will theGovernment's intent to increase private sector participation in the distributionsector. Monetization of transmission assets through InvIT model is a promising move whichwould help in adding transmission capacity to match the rapid pace of electricitygeneration and increasing demand.

Ambitious plans are lined up for transition towards renewable energyas also towards hydrogen-based energy and smart metering. Expanding domestic manufacturingis necessary to support the growth of renewables. The phased local manufacturing plan forsolar cells and panels would help minimize dependence on imports for solar cells andmodules in the long run contributing towards Atmanirbhar Bharat. The production-linkedincentive scheme for battery manufacturing would also enhance the ecosystem for storagemanufacturing in the country with positive implications for renewable energy andE-mobility sectors. At the same time the sector should be watchful towards minimizingstressed assets.

While the private sector is expected to take a lead in the investmentsin renewable energy the investments in conventional and atomic energy would largely comefrom the public sector. Your Company is well poised for the existing and emergingopportunities presented in the power sector. Your Company is building close professionalpartnerships with national and international financial institutions and multilateraldevelopment organizations to enable the Company in raising resources at competitive ratesand aligning with international best practices.

In the future your Company looks forward to diversify into neweremerging fields not just as a funding partner but also through its subsidiaries and jointventures. In all your Company is committed to the ultimate objective of a robustresilient and reliable power sector.


I express my sincere gratitude to the Hon'ble Minister of Powerand New & Renewable Energy Hon'ble Minister of State for Power Secretary(Power) and other Officials of the Ministry of Power for their continued support andguidance. I am also thankful to the holding company Power Finance Corporation Limitedfor their cooperation.

I am grateful to the officials of Ministry of Finance Ministry ofCorporate Affairs NITIAayog DIPAM Department of Public Enterprises Reserve Bank ofIndia Securities & Exchange Board of India Stock Exchanges and the Depositories fortheir goodwill and support.

I would also like to thank the Comptroller & Auditor General ofIndia Statutory Auditors Secretarial Auditors Registrars and other professionalsassociated with the Company for their contribution. My special thanks to all investorslenders borrowers and customers including State Governments State power utilities andprivate entrepreneurs in the power sector for placing their trust in the Company.

Last but not the least I would like to thank my esteemed colleagues onthe Board for the immense value they add. I also appreciate the untiring efforts of allemployees of REC. It is with the continuous efforts and cooperation of all of you thatREC moves ahead on the path of all-round growth. Thank you and Jai Hind!

With warm wishes
Sanjay Maihotra
Chairman and Managing Director
August 27 2021