India’s Top PSUs 2019

India’s Top PSUs 2019 Experts’ View E - 5 How has been PFC’s financial performance during FY19? In March 2019, the acquisition of REC Limited has resulted in a significant inorganic growth opportunity for PFC. Following this acquisition, PFC’s combined annual revenue stood at ` 500 bn, and the loan assets and profits stood at ` 6 trillion and ` 125 bn respectively. Our company recorded its highest disbursements for three years in a row and with this year’s loan disbursements crossing ` 676 bn mark. The loan assets also saw a robust growth of 13% during the year. On the borrowing front, the share of foreign currency borrowings in the overall borrowing increased to 10% on the back of fresh foreign currency mobilization of USD 1.5 billion during the year. In June 2019, PFC raised USD 1 billion under its MTN programme with 5 years and 10-year tenors, which was the first dual and largest USD bonds transaction for Government owned Indian NBFC and also the first 5-year issuance by PFC. Due to the various efforts made by PFC on the borrowing front, the cost of funds has reduced significantly from 8.21% in FY18 to 7.95% in FY19. What opportunities you think India’s rising renewable energy sector presents? In order to encourage Renewable Generation, Ministry of Power Power Finance Corporation Limited extended the waiver of ISTS Transmission charges and losses for Solar & Wind based Projects upto March 2022. Further, in order to achieve the Renewable target of 1,75,000 MW of Renewable Capacity by 2022, MOP issued Long Term Growth trajectory Renewable Purchase Obligation (RPO) for Solar as well as Non-Solar till the year 2022. This presents Indian power sector companies to increase their portfolio to renewable energy project and enable India to achieve its vision of renewable energy. What is your outlook on the Indian power sector? The growth of Indian economy has been supplemented by the power sector despite facing several challenges. Now every village has access to quality and affordable electricity while power to every family has become a near reality. Energy deficit has been reduced to almost zero and India emerges as net exporter of electricity to Nepal, Bangladesh and Myanmar. More than 1,07,000 MW Generation Capacity has been added between April 2014 and March 2019. These developments coupled with a huge capacity creation in renewable and new energy resources have provided a great business opportunity to PFC. Under Saubhagya, a flagship scheme of Government of India, almost 100% household electrification has been achieved. Various steps have been taken by the government to tackle the issue of stressed assets in power sector. Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) was launched to provide coal to the stressed power projects. SHAKTI covers projects which have PPAs but do not have Fuel Supply Agreements in place and also those which do not have Power Purchase Agreements (PPAs). Also, a Pilot Scheme for mid- term PPA for stressed projects was launched by the Ministry of Power for which PFCCL, our subsidiary company is the Nodal Agency and PTC is the aggregator to purchase power for three years from commissioned projects with no PPA. Now Phase II of the Pilot PPA scheme has been launched with PFCCL as the Nodal Agency and NHPC as the aggregator. These initiatives will help the projects to sell power on sustainable basis and resolve the stress going forward. I am pleased to share that under these schemes some of the projects financed by PFC have received coal linkages and also mid-term PPAs, which will help in resolution of stress. Rajeev Sharma Chairman & Managing Director