India’s Top 500 Companies 2022

INDIA’S TOP 500 COMPANIES 2022 49 Experts’ View Power sector is expected to see its demand coming from renewable energy projects, which are capex heavy. How well is REC placed to meet the financial requirements of the power sector? About 85% of REC’s loan book of ₹ 3,850 bn (as on 31.03.2022) is dedicated to capex loans for Conventional Energy projects. REC traditionally funds capex-heavy projects and has exposure in almost all States. Therefore, REC has adequate experience to cater the capex requirements in renewable energy (RE) projects and energy transition projects as well. Presently, REC’s exposure towards RE segment is just around 3% of its loan book which has a significant potential to enhance. Although, majority of developers in RE segment are from the private sector but over the years, REC has developed its capability for sound appraisal of these private sector RE projects through fundamentally strong guidelines and policies formulated over a long time based on experiences and through support from consulting firms. Hydro Power Projects, which are now a part of RE under the new hydro policy, also require higher capex. REC’s expertise in raising funds for projects with longer gestation periods & therefore, longer loan tenures has already enabled us to fund many such projects across the country. Lastly, it is to mention that the coal based power plants shall remain in focus in order to address the variability associated with RE generation. REC LIMITED Vivek Kumar Dewangan, IAS Chairman & Managing Director What are your growth objectives for next 3-5 years? How do you plan to achieve it? With economic activities returning to the pre-pandemic levels, power demands are touching record highs. Hence, capex is expected to gain momentum in power sector which will boost REC’s business. Furthermore, as a consequence to the emergent situation due to rise in demand and supply constraints of domestic coal, all States and Gencos based on domestic coal had been directed by MoP to import at least 10% of their requirement of coal for blending. This situation though temporary, will be there for at least the present FY. REC along with PFC is aiding the Gencos through financial assistances in this regard. As REC’s major business is from State/ Joint sector (~90% of its order-book), priorities are clearly to expand this business with our existing customers. It indeed is very challenging in this current market scenario but our regional offices are working extensively to grab possible business opportunities available. Presently, REC offers a wide range of products to finance the needs of the Power Sector across the value-chain and has a strong foothold in its existing area of operations. REC has started financing of Electro-Mechanical, Hydro-Mechanical components and associated Civil works in large lift irrigation projects along with installation of pollution control equipment in thermal power plants like Flue-Gas Desulfurization (FGD), Selective Catalytic Reduction (SCR), Electrostatic Precipitators (ESP). Our priority shall be to further strengthen this existing business portfolio in the coming 4-5 years. Additionally, we are planning to finance power sector related equipment & construction works of other industries/ sectors, battery storage systems, charging infrastructure, energy-efficient/power- saving devices, etc. In our zeal to expand our participation in clean power, we have started supporting Nuclear projects as well. With continuous rise in the demand and Revamped Distribution Sector Scheme (RDSS) coming up quickly, REC expects major business opportunities in next 2-3 years. REC is also poised to enter new areas of business, such as financing power equipment manufacturing, debt syndication, fee based project appraisal for other financial institutions, line of credit, bill discounting and other activities having a linkage with energy related projects. We’ve started extending loans towards metro line projects being developed in many cities, which poses an excellent business opportunity for REC. Going forward, RE will be a key focus area for REC over the next few years, commensurate with the Government of India’s ambitious thrust on developing this segment with the Hydro policy, Solar Rooftop programme etc. The RE portfolio of REC has been growing in terms of both quantity and quality. Our overall emphasis for future shall be the investment with an aim to reduce carbon footprints, in line with international commitment of our Hon’ble Prime Minister. Dun & Bradstreet