REC- 1-51.p65 - Rural Electrification Corporation Ltd.

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20 To The Shareholders, The Directors have the pleasure in presenting the Forty First Annual Report together with the Audited Accounts of the Company for the financial year ended 31st March, 2010. 1. PERFORMANCE HIGHLIGHTS 1.1 The highlights of performance of the Company for the year 2009-10 were as under with comparison of previous year’s performance:- Parameter 2009-10 2008-09 (Rs. in crore) (Rs. in crore) Loans sanctioned Disbursements (including 45357.36* 40745.84* subsidy under RGGVY) 27127.14 22277.86 Recoveries 12496.12 9796.97 Total Operating Income 6549.76 4757.17 Profit before tax 2649.19 1920.11 Profit after tax * Excluding subsidy under RGGVY. 2001.42 1272.08 1.2 Financial Performance The total operating income of the company for the year increased by 38% to Rs. 6549.76 crore from Rs. 4757.17 crore during the previous year. The profit before tax increased by 38% to Rs.2649.19 crore from Rs. 1920.11 crore for the previous year and the profit after tax increased by 57% to Rs. 2001.42 crore from Rs. 1272.08 crore for the previous year. 1.3 Dividend In addition to interim dividend of Rs.3.00 per share paid in January, 2010, your Directors are happy to recommend a final dividend of Rs.3.50 per share for the year 2009-10. The total dividend for the year will work out to Rs. 6.50 per share as against Rs. 4.50 per share paid last year. The total dividend pay-out for the year will amount to Rs.603.21 crore. REC declares final dividend of Rs. 214.67 crore for financial year 2008-09. The dividend cheque is handed over by Shri P. Uma Shankar, CMD, REC to Hon’ble Union Minister of Power, Shri Sushilkumar Shinde on 25 th September, 2009. DIRECTORS’ REPORT 41st ANNUAL REPORT 2009-10 1. 4 Further Public Offering (FPO) of Shares In February 2010 the Company made Further Public Offering (FPO) of 171,732,000 equity shares of face value of Rs. 10 each for cash at prices determined through the alternate book-building method under Part D of Schedule XI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. The Issue comprised of a fresh issue of 128,799,000 equity shares by the company and an Offer for Sale of 42,933,000 equity shares by the President of India, acting through Ministry of Power, Government of India, as selling shareholder. The Shares were issued to Non-Institutional/ Retail Individual Investors at Rs. 203/- per equity shares, to employees of the Company at Rs.193/- per equity shares and to QIB category including mutual funds at Rs. 206/- & above as per bids submitted by them. The Issue got a phenomenal response and it was oversubscribed by 3.14 times. The total number of applications received were 57858. The fresh equity shares were allotted on 5th March 2010 and the total amount raised by the Company through FPO was Rs. 2647.53 crore. The proceeds of the fresh issue of equity shares have been utilized for the purpose of the business of the Company as mentioned in the offer document. Trading in equity shares of the Company issued under FPO commenced on the National Stock Exchange of India Limited and Bombay Stock Exchange Limited on 8th March 2010, and requisite Listing Fees have been paid to each of these Stock Exchanges. In the Post-FPO scenario, the shareholding of the Government of India has reduced from 81.82% to 66.80% and the balance 33.20% is held by public. 1.5 Share Capital The Issued and Paid up Share Capital increased from Rs. 858.66 crore to Rs.987.46 crore as on 31.03.2010 after FPO, against the Authorized Capital of Rs.1200 crore, and an amount of Rs.2499.18 crore (net of Issue expenses of Rs.19.55 crore) has been taken to Security Premium Account. 2. LOANS SANCTIONED The Company sanctioned loans worth Rs.45357.36 crore during the year 2009-10, as against Rs.40745.84 crore in the previous year excluding subsidy under RGGVY. The state and category-wise break-up of loans sanctioned during the year are given in enclosed Tables-1 and 2 respectively. The cumulative amount of sanctions made since inception upto 31.3.2010 was Rs.266775.59 crore including subsidy under RGGVY. The cumulative statewise position of sanctions up to the end of 2009-10 is given in enclosed Table-3. 3. DISBURSEMENTS A total sum of Rs.27127.14 crore was disbursed during the year 2009-10 as against Rs. 22277.86 crore in the previous year including subsidy under RGGVY. The cumulative amount disbursed since inception upto 31.3.2010 was Rs.113533.13 crore excluding subsidy under RGGVY. The state-wise disbursements and repayment by borrowers during the year together with cumulative figures and outstandings as on 31.3.2010 are given in enclosed Table-4.
RURAL ELECTRIFICATION CORPORATION LIMITED 4. RECOVERIES 4.1 The amount due for recovery during the year 2009-10 was Rs.12461.02 crore as compared to Rs.9788.90 crore during the previous year. The overdues from defaulting borrowers were Rs.166.60 crore as on 31.3.2010. The Company recovered a total sum of Rs.12496.12 crore during the year 2009-10 against Rs. 9796.97 crore during the previous year. The details are given below: Particulars Total (Rs. in crore) Overdues as on 1.4.2009 201.70 Dues receivable during the year 12461.02 Received during the year 12496.12 Overdues as on 31.03.2010 166.60 4.2 Out of the overdues of Rs.166.60 crore as on 31.03.2010, a sum of Rs.30.32 crore stands recovered till 31.05.2010. 4.3 The company has also been making efforts to bring down Non-Performing Assets (NPAs) to Zero level. As on 31.03.2010 the Gross NPAs of the company stood at Rs.19.54 crore (i.e. 0.03% of Gross Loan Assets), as compared to Rs.68.89 crore (0.14% of Gross Loan Assets) as on 31.03.2009. 5. FINANCIAL REVIEW 5.1 A summary of Financial Results The summary of financial results of the Company for the year ended 31st March, 2010 is given below: Standalone (Rs. in crore) Consolidated Particulars 2009-10 2008-09 2009-10 2008-09 Gross Income 6707.60 4931.28 6747.63 4936.55 Profit before tax 2649.19 1920.11 2680.76 1922.36 Depreciation 2.16 1.36 2.18 1.37 Provision for Income Tax & Deferred Tax 647.77 648.03 658.51 648.83 Net Profit / Profit after Tax 2001.42 1272.08 2022.25 1273.53 Appropriations : Transfer to Special Reserve Transfer to Reserve for Bad & 458.03 340.00 458.03 340.00 Doubtful Debts 107.60 80.00 107.60 80.00 Interim Dividend 257.60 171.73 257.60 171.73 Dividend Tax on Interim Dividend Proposed Final 43.77 29.19 43.77 29.19 Dividend Dividend Tax on proposed Final 345.61 214.67 345.66 214.72 Dividend Transfer to 57.40 36.48 57.41 36.49 General Reserve 500.00 255.00 500.75 256.00 Balance carried forward 557.17 145.01 577.20 145.40 5.2 Resource Mobilization The Company mobilized Rs.24028.24 crore from the market during the year 2009-10. This includes Rs.3055 crore by way of loan from commercial banks, Rs.3057.77 crore by way of capital gain tax exemption bonds, Rs.13529.50 crore by way of non-priority sector bonds, Rs.3150 crore through Commercial Paper(CP), Rs.630 crore by way of Short Term Loan from Commercial Banks and Rs.605.97 crore by way of Official Development Assistance (ODA) loan from Kreditanstat fur Wiederaufbau (KfW), Germany & Japan International Cooperation Agency (JICA),Japan. The domestic debt instruments of REC continued to enjoy “AAA” rating – the highest rating assigned by CRISIL, CARE, FITCH & ICRA-Credit Rating Agencies. Cash Credit Facilities For day to day operations, the Company also arranged cash credit limits to the tune of Rs. 1200 crore from various banks. 5.3 Sovereign rating REC enjoys international credit rating equivalent to sovereign rating of India from International Credit Rating Agencies Moody’s and FITCH which is “Baa3” and “BBB-” respectively. 5.4 Cost of borrowing. As per the Finance Act 2006, only REC and National Highway Authority of India (NHAI) were eligible to raise money through bonds issued under Section 54 EC of the Income Tax Act, 1961. This helped in keeping the cost of borrowing at a low level. The overall annualized average cost of funds was 7.31% during the year 2009-10. As a result REC is able to deliver debt financing at competitive rates. 5.5 Redemption and Pre-Payment During the year, the Company repaid a sum of Rs. 15.32 crore to the Government of India. It also redeemed a total sum of Rs.838.92 crore owed to non- priority/ priority sector bond holders. In addition, Rs.7414.99 crore worth of Capital Gain Tax Exemption Bonds and Rs.13.46 crore of Infrastructure Bonds were also redeemed. The company also redeemed long term and short term loans from Banks of Rs.2624.62 crore and Commercial Paper of Rs.1995 crore. 5.6 Particulars regarding Conservation of Foreign Exchange Earnings & Outgo The particulars regarding foreign exchange outgo during the year under review are given in point 16 of Schedule 17 to the “Notes on the Accounts” forming part of the Annual Accounts. No foreign exchange was earned during the year under review. 5.7 Financial status at the close of the year At the close of the financial year 2009-10, the total resources of the Company stood at Rs.67028.56 crore. Out of this sum, Equity Share Capital contributed Rs.987.46 crore, Reserve and Surplus stood at Rs.10092.87 crore, Loans from LIC, Commercial Banks and Market Borrowings accounted for Rs.55948.23 crore. These funds were deployed as Long / Short Term Loans of Rs.66452.61 21
Page 2 and 3: CORPORATE OFFICE ZONAL OFFICES REGI
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Page 6 and 7: 4 MISSION Mission & Objectives 41st
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