Rural Electrification Corporation

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Rural Electrification Corporation Limited
Type State-owned enterprise,
Public Company
Traded as NSERECLTD, BSE532955
Industry Financial services
Investment management
Founded 1969
Headquarters New Delhi, India
Area served India
Key people Rajeev Sharma,
Chairman & MD
Products Investment and private banking, asset management
Revenue Increase INR105.09 billion (US$1.7 billion) (2011–12)
Operating income Increase INR75.91 billion (US$1.3 billion) (2011–12)
Net income Increase INR28.17 billion (US$470 million) (2011–12)
Total assets Increase INR1087.29 billion (US$18 billion) (2011–12)
Total equity Increase INR147.45 billion (US$2.4 billion) (2011–12)
Employees 600
Parent Government of India
Website recindia.nic.in

[1] Rural Electrification Corporation Limited (REC) is a leading public Infrastructure Finance Company in India’s power sector. The company finances and promotes rural electrification projects across India, operating through a network of 13 Project Offices and 5 Zonal Offices, headquartered in New Delhi. The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers.

REC is a Navratna Company[2] functioning under the purview of the Ministry of Power – Government of India. The company is listed on both National Stock Exchange of India and Bombay Stock Exchange.

The company is currently among the top 500 Global Financial Services brands by UK-based plc Brand Finance (Brand Finance @ Global Banking 500 for 2010).[3] The company is also among the Forbes Global 2000 companies for 2010.[4]

Business Operations[5][edit]

REC Signage.JPG
REC Corporate Office Delhi.JPG

REC’s business model spans across the value chain of power infrastructure financing including
(a) equipment finance,
(b) technical/ financial appraisal of project,
(c) project finance as well as short term or bridge loans for generation, intensive electrification, transmission, distribution, repair and maintenance,
(d) support functions like project monitoring, consultancy and advisory.

The company operates autonomously as a Central Public Sector Enterprise under the Ministry of Power,[6] Government of India and also acts as nodal agency for expansive Government of India schemes for building electricity infrastructure.

Business operations in India are supported by a network of 19 offices headquartered in New Delhi.

Services Provided[edit]

The company is primarily engaged in providing finance for rural electrification projects across India and provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers. The company sanctions loan as a sole lender or co-lender or in consortium with or without the status of lead financer. It also provides consultancy, project monitoring and financial/ technical appraisal support for projects, also in the role of nodal agency for Government of India schemes or projects.

Projects[edit]

REC finances all types of Power Generation projects including Thermal, Hydel, Renewable Energy, etc. without limit on size or location. The company aims to increase presence in emerging areas like de-centralised distributed generation (DDG) projects, and new and renewable energy sources to reach remote and difficult terrains not connected by power grid network.

In Transmission & Distribution (T&D), REC is primarily engaged in ascertaining financial requirements of power utilities in the country in the T&D sector along with appraising T&D schemes for financing. REC has financed T&D schemes for system improvement, intensive electrification, pump-set energisation and APDRP Programme. The company is also actively involved in physical as well as financial monitoring of T&D schemes.

REC also offers loan products for financing Renewable Energy projects. The company has tied up a line of credit for EUR 100 mn(approximately INR6000 mn) with KfW under Indo-German Development Cooperation for financing renewable energy power projects at concessional rates of interest. Eligible projects include Solar, Wind, Small Hydro, Biomass Power, and Cogeneration Power & Hybrid Projects.

Resource Mobilisation[edit]

REC raises funds through various domestic and international sources, including Commercial Banks, Capital Gain Tax Exemption Bonds, Non-Priority Sector Bonds & Commercial Paper, and Official Development Assistance loan from international agencies. International collaborations have included past tie-ups for External Commercial Borrowings with Standard Chartered Bank (London), DEPFA Investment Bank Limited (Cyprus)[7] etc. as well as current tie-ups with KfW (Germany) and Japan International Cooperation Agency (Japan) under Official Development Assistance. As an IFC, REC can also issue Infrastructure Bonds and raise funds up to USD 500 mn through External Commercial Borrowing in a year.

Domestic debt instruments of REC are assigned the highest rating "AAA" by reputed credit rating agencies CRISIL, Fitch and ICRA. Moody’s and Fitch have rated its international credit rating at par with India’s sovereign rating.

IPO & FPO[edit]

The Company was listed on the National Stock Exchange of India and the Bombay Stock Exchange on 12 March 2008. REC went for Initial Public Offer of 156,120,000 Equity Shares in February 2008 which was oversubscribed by about 27 times, raising a total amount of INR819 crores. Further Public Offer of 171,732,000 equity shares was made in February 2010. The issue was oversubscribed by 3.14 times, raising a total of INR26.47 billion

History[8][edit]

Time-line[edit]

1969 Incorporated as a Company under the Companies Act, 1956
1992 Notified as a "Public Financial Institution"
1998 "Non-banking Financial Company (NBFC)” status by RBI
2002 "Mini Ratna Grade-I" Status
2008 "Navratna" Status,[9]
IPO of shares and partial divestment
2010 "Infrastructure Finance Company (IFC)[10][11][12]” status by RBI,
FPO of shares with 33.2% being public held

Early years[edit]

REC was set up in July 1969, in the backdrop of a critical draught situation facing India in the late sixties. The company’s initial mandate was mainly to help State Electricity Boards energise pump-sets across the country to boost agriculture and overcome the crippling impact of three successive years of deficient monsoons. The company also provided finance to accelerate the pace of rural electrification in the overall context of planned programmes for increased agricultural production. Besides finance, REC also offered appraising, consultancy, technical support and monitoring of projects, to assist State Electricity Boards/Power Utilities, Rural Electric Cooperatives and other such institutions.

Post-Liberalized India (1990s)[edit]

Liberalization by the Government of India (GoI) in 1991 saw introduction of amendments to existing laws and reform measures enabling the private sector to participate in large-scale in manufacturing industry, services industry and infrastructure. Sectors like power, airports, seaports, roadways, projects were identified for private participation, and nodal agencies were set up to do the initial spade work and later hand over such projects to private players through competitive bidding routes. In April 2006, GoI identified 14 transmission projects worth INR200 billion for development by 2012. REC was identified as one of the two GoI-appointed nodal agencies for transferring identified projects to private developers. REC also started extending loans to manufacturers of T&D equipment.

2000–Current[edit]

Till 2000, REC focused on the Transmission and Distribution aspect of power, with projects for household electrification in rural and semi-urban areas, area electrification in tribal/ dalit areas, intensive electrification, and system improvement projects based on strengthening and improving transmission, sub transmission and distribution systems. REC’s portfolio of Generation projects constituted mainly Mini/Micro Generation Projects up to 25MW capacity till 2000. In June 2002, the mandate of REC was expanded to include financing of all generation projects without limit on size or location. Today, financing of Generation projects has become a major thrust-area of operations for REC, also attracting majority of its private sector borrowers.

REC has systematically diversified into new and emerging areas of potential in the power business, and is today a major player in India’s power financing business with robust presence in all three functional areas of the power sector: generation, transmission and distribution. In coming years, REC plans to invest heavily on financing of New and Renewable Energy, De-centralised Distributed Generation (DDG) and modernisation of T&D systems for optimisation of reliable power supply to remote/ difficult rural and urban areas including hill, desert, tribal, riverine areas etc.

Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY)[edit]

Since 2005, REC has been appointed nodal agency by Ministry of Power [1] for Government of India scheme Rajiv Gandhi Grameen Vidyutikaran Yojana[13][14] aimed at building rural electricity infrastructure and household electrification towards the National Common Minimum Programme goal of access to electricity for all. Under the scheme, 90% capital subsidy is provided by Government of India for overall cost of projects. Cumulatively till FY10, works in 190,858 villages have been completed and free connections to over 10 million below poverty line (BPL) households have been released.

Rural Electrification Status[edit]

Rural Electrification rates N.o of states and UTs Remarks [15]
100% 14
99% 4 electrification %, un-electrified villages: Gujarat (99.8%, 35), Maharashtra (99.9%, 36), Himachal Pradesh (99.9%, 15), West Bengal (99.99%, 4)
+95% 7 Assam (96.1%), Bihar (97%), Chhattisgarh (97.4%), Rajasthan (97.6%), Madhya Pradesh (97.7%), Jammu & Kashmir (98.2%), Uttaranchal (98.9%)
+90% 2 Tripura (92.9%), Mizoram (93.5%)
+80% 5 Orissa (81.9%), Meghalaya (86.3%), Manipur (86.3%), Uttar Pradesh (88.9%), Jharkhand (89.2%)
Under 80% 3 Andaman & Nicobar (67.7%), Nagaland (70.1%), Arunachal Pradesh (75.5%)

Central Institute for Rural Electrification (CIRE)[16][edit]

In 1979, REC established a national training institute in Hyderabad for the development of techno-managerial skill and efficiency in State Electricity Boards (SEBs), Distribution Companies, Rural Electric Cooperatives and other Power Utilities, and also to conduct in-house training programmes for REC’s employees. CIRE also served as a platform for association with other institutions towards a common goal of Rural Electrification (RE) and rural energy development.

Today, CIRE conducts regular programmes on various aspects of Transmission and Distribution for national and international executives in the power sector, including seminars participated by both private and public utilities. Programmes focus on adoption of innovative and cost effective modern technologies, training in both conventional and non-conventional energy areas and practical demonstrations via an in-house Energy Park.

Subsidiaries[edit]

REC has set up wholly owned subsidiaries viz. REC Transmission Projects Company Limited (RECTPCL) and REC Distribution Projects Company Limited (RECPDCL)[2] with a view to pursue new opportunities and challenges in the field of Transmission & Distribution, including consultancy and monitoring.

Energy Efficiency Services Limited (EESL)[edit]

EESL is a joint venture (JV) with 4 power PSUs – REC, Powergrid, NTPC, and PFC for implementing energy efficiency projects, promoting usage of energy efficient appliances, promoting the concept of Energy Service Companies (ESCOs) etc.

Indian Energy Exchange (IEX)[edit]

REC is an equity partner in Indian Energy Exchange (IEX)[3], India’s first nationwide, automated, and online electricity trading platform (power exchange/ electricity market), among other reputed investors like IDFC, Adani, Reliance Energy, Lanco and Tata Power.

Recent Awards[edit]

2010 India Power Award 2010 from Council of Power Utilities[17]
2010 India Pride Award 2010 for 'Best NBFC'[18]
2010 DSIJ PSU Award 2010 from Dalal Street Group for 'The Best Wealth Creator'[19]
2010 Global HR Excellence Award for 'Organisational Development & Leadership' in Asia-Pacific HRM Congress 2010[20]
2009 India Pride Award 2009 for 'Excellence in Rural Electrification'[21]
2009 SCOPE Gold Trophy, '08–'09 for 'Best Managed Financial Institution'[22]

References[edit]

  1. ^ "Rural Electrification Corporation". rec.nic.in. Retrieved 16 July 2012. 
  2. ^ "List of Navratna CPSEs". Dpe.nic.in. 30 November 2010. Retrieved 3 February 2011. 
  3. ^ "The Global Banking 500 League Table". Brandirectory. Retrieved 3 February 2011. 
  4. ^ "The Global 2000". Forbes.com. 1 March 2010. Retrieved 3 February 2011. 
  5. ^ http://content.indiainfoline.com/Admin/ResearchPdf/384499217_LS_Power_Financing_Electrifying_India_220210.pdf
  6. ^ "Rural Electrification Corporation". Powermin.nic.in. Retrieved 3 February 2011. 
  7. ^ http://www.recindia.nic.in/download/Chairman_Speech06_07.pdf
  8. ^ http://www.ieema.org/pdfs/Annual%20Convention28-32634243746695820000.pdf
  9. ^ "PSU INDIA – The first server to Public Sector Units, servers to the nation : PSU News, Policy News, Vendor news, PSU Stock News, PSU stock market, PSU Tenders, PSU Jobs, Corporate Social Responsibility from the PSU INDIA". Psuindia.in. Retrieved 3 February 2011. 
  10. ^ "IFC status to help REC lend more to private sector". Business-standard.com. 21 September 2010. Retrieved 3 February 2011. 
  11. ^ "IFC_STATUS". recindia.nic.in. Retrieved 3 February 2011. 
  12. ^ "REC gets additional lending exposure with IFC status". Psuindia.in. 20 September 2010. Retrieved 3 February 2011. 
  13. ^ "Rajiv Gandhi Grameen Vidyutikaran Yojana". Rggvy.gov.in. Retrieved 3 February 2011. 
  14. ^ "Record". powermin.nic.in. Retrieved 3 February 2011. 
  15. ^ http://www.cea.nic.in/reports/monthly/dpd_div_rep/village_electrification.pdf
  16. ^ "About_CIRE". recindia.nic.in. Retrieved 3 February 2011. 
  17. ^ http://www.indiapower.org/ipa2010/indiapawardie.pdf
  18. ^ "Dainik Bhaskar Group Felicitates Winners of India Pride Awards 2010 " Best Media Info, News and Analysis on Indian Advertising, Marketing and Media Industry". Bestmediainfo.com. 14 September 2010. Retrieved 3 February 2011. 
  19. ^ "18 awards to PSUs – DSIJ Awards 2010 | Corporate News India and Corporate Affair News India". Imagementors.com. 7 April 2010. Retrieved 3 February 2011. 
  20. ^ "asiapacifichrmcongress". asiapacifichrmcongress. Retrieved 3 February 2011. 
  21. ^ "News – Hindi News – India News – News in Hindi – News Headlines – Breaking News – Daily News – Hindi News Papers – Local News". Bhaskar.com. 9 October 2009. Retrieved 3 February 2011. 
  22. ^ ":: SCOPE : Press Releases". Scopeonline.in. Retrieved 3 February 2011. 

External links[edit]