Rural Electrification Corporation Company Analysis

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This is a documentation is about company analysis of rural electrification corporation.

RURAL ELECTRIFICATION CORPORATION LIMITED Company description Rural Electrification Corporation Limited (REC) is a listed Public Sector Enterprise Government of India with a net worth of Rs. 12,789 crore as on 31.03.11. Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them. REC provides loan assistance to SEBs (State Electricity Boards)/State Power Utilities for investments in rural electrification schemes.

General Information REC, a Public Sector Enterprise, was incorporated on July 25, 1969 under the Companies Act 1956. REC is a listed Government of India Public Sector Enterprise with a networth of Rs. 11,080 crore. Its main objective is to finance and promote rural electrification project all over the country. The Corporate Office is located at New Delhi and seventeen fully staffed Project Offices are located in different states of the country, apart from one Training Institute viz. Central Institute for Rural Electrification at Hyderabad. To focus attention on human resources development, Corporation has been sponsoring its Executives and Non-Executives to specialised Training programme conducted by various agencies and overseas organisations of repute. As on 01.05.2011 it has on its roll 682 employees, (391 Executives from different disciplines viz. Engineering, Finance, Economic and specialised cadres and 291 non-Executives). The Corporation was recently given an award by the Hon'ble Vice President of India for being one of the top 10 performing PSEs in the country. Shree Rajeev Sharma is the Chairman and the Managing Director as on 16 March 2012. The other members in thew Board Of Directors include Shri Hari Das Khunteta, Director (Finance) Shri Prakash Thakkar, Director (Technical) Shri Devender Singh, JS, MoP, Government Nominee Director Dr. Devi Singh, Parti-time Non-official Independent Director Dr. Govinda Marapalli Rao, Part-time Non-official Independent Director Shri Venkataraman Subramanian, Part-tinie Non-officiallndepe irector. (Source: http://recindia.nic.in).

The Financial Performance of REC in the previous fiscal year is as follows(in Rs crore) Mar 12 Revenue
2,807.19 2,663.68
769.51 7.79 7.80 100.78 28.89

Dec 11

Fy 11-12
10337.59
2,817.03 28.53 28.56 98.43 27.25

Net profit EPS Cash EPS OPM % NPM %

762.69 7.72 7.73 99.43 27.17

The comparison of REC with its peers REC LTP Change % 52 WH /L
191.30 0.13 251.40 / 142.00

Power Finance
173.50 -2.50 223.80 / 130.20

IDFC
137.25 -1.68 160.80 / 90.25

Shriram Trans
538.90 -1.45 707.85 / 416.00

RESULTS MAR 12 MAR 12 MAR 12 10,337.59 13,014.85 6,094.32 Sales Profit 2,817.03 3,031.74 1,602.96 after tax 987.46 1,319.93 1,512.36 Equity Ratios 98.43 99.22 93.33 OPM % 27.25 23.29 26.30 NPM % 28.53 23.41 10.57 EPS 28.56 23.01 10.81 CEPS

MAR 12
5,889.47 1,257.45 226.32 73.96 21.35 55.59

SWOT analysis of REC Rural Electrification Corporation Limited is a leading public Infrastructure Finance Company in India’s power sector. Strengths: REC is a public sector company under the Government and so it has a very strong financial backing. 90% capital subsidy is provided by Government of India for overall cost of projects REC finances all types of power generation projects including Thermal, Hydel, Renewable Energy, etc. without limit on size or location. REC was given the ‘Navaratna’ Status by the Government in 2008 which gives it the autonomy to drive its growth. The company provides loans to Central/ State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, NGOs and Private Power Developers. Weaknesses: Since it is a company controlled by the Government, it could come under political pressure and political intervention. Also Government being the main stakeholder of the company it could be under the pressure of paying constant dividends to the Government . Opportunities: In coming years, REC plans to invest heavily on financing of new and renewable Energy, Decentralized Distributed Generation (DDG) and modernization of T&D systems for optimization of reliable power supply to remote rural and urban areas. It is a part of the Joint Venture EESL for implementing the projects efficiently. REC is an equity partner in Indian Energy Exchange (IEX), India’s first nationwide, automated, and online electricity trading platform. Threats: REC gets affected by the change in Government policies and regulations. Its work in remote places is dependent on environmental conditions and very little can be done in the regions not conducive for their set up.

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Recent Performance of REC Major Projects sanctioned so far by REC in state sector include Santaldih TPP in West Bengal, Lehra Mohabbat TPP in Punjab, Korba(East) and Korba(West)TPPs in Chhattisgarh, Vijaywada and Kakatiya TPP in Andhra Pradesh, Bhusawal and Chandrapur TPP in Maharashtra, Tehri HEP in Uttaranchal, Utran TPP in Gujarat, Durgapur Steel TPP of DVC, Baglihar HEP in J&K, Anpara-D TPP in Uttar Pradesh, Vallur and North Chennai TPP in Tamilnadu, Chhabra TPP in Rajasthan, Nabinagar Thermal Power Project in Bihar etc. Major promoters in private sector have also approached REC for finance. In private sector, REC has sanctioned loan for Karcham Wangtoo HEP in Himachal Pradesh, Sasan Ultra Mega PowerProject, Mahan Superthermal Power Project and Maheshwar HEP in M.P., Pathadi TPP in Chhattisagrh, Wardha TPP in Maharashtra, Adani thermal Power Project in Gujarat, Teesta Stage-III and VI HEP in Sikkim etc. Some of the promoters have even approached REC for taking up the role of lead financier in consortium. At present, REC is acting as lead financier in 100 MW Malana-II Hydro Electric Project in H.P., the 1200 MW Teesta Phase-III Hydro Electric Project in Sikkim, the 270 MW phase-I and 270 MW Phase-II coal based thermal power project of Wardha Power Company Pvt. Ltd. in Maharashtra, the 1200 MW Anpara-C Thermal Power Project in Uttar Pradesh and the 1320 MW coal based thermal power project of Thermal PowerTech Corporation (India) Ltd. in Andhra Pradesh. Also REC finances all type of Power Generation Projects based on Renewable Energy Sources i.e Solar PV, Solar Thermal, Wind, Biomass , Cogeneration, Small Hydro etc. REC has set up a wholly owned subsidiary, viz. REC Transmission Projects Company Limited and REC Distribution Projects Company Limited. REC is a part of Joint Venture EESL for implementing energy efficient projects and promoting the use of energy efficient appliances. It is also an equity partner in Indian Energy Exchange (IEX), India’s first nationwide, automated, and online electricity trading platform



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