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Rural Electrification Corporation to raise up to Rs 37,000 cr in FY14

According to reports, Rural Electrification Corporation (REC), a leading state-run infrastructure finance company in India’s power sector is planning to raise Rs 35,000-37,000 crore in the current financial year compared with a borrowing of Rs 31,000 crore last fiscal.

“We will raise about Rs 35,000-37,000 crore this financial year and this includes Indian as well as overseas fund raising. The overseas fund raising may be about Rs 5,000 crore,” said  Ajeet Agarwal, director (finance), REC to Business Standard. According to Agarwal last fiscal the company had raised a total sum of Rs 31,000 crore which includes domestic as well as international fund raising.

The funds raised by REC is used in the financing and promotion of power generation, transmission and distribution including renewable energy projects throughout India.

REC has hit the street on Tuesday with a private placement bond issue worth Rs 4,300 crore. “The tenure of these bonds are 10 years and the coupon rate is 8.82%. The issue is open till Friday,” said Agarwal. Domestically REC raise funds by way of private placement of bonds, commercial papers and tax-free bonds.

In the previous fiscal REC has raised Rs 2,700 crore by way of tax-free bonds. Even in the current fiscal this route of fund raising will be tapped. However, tax-free bond issues did not meet with much success in the previous fiscal due to which companies had extended the last date of subscription of these bonds and had also come up with a second tranches.

According to Agarwal the overseas fund raising will be by way of External Commercial Borrowings (ECBs). “We will apply to Reserve Bank of India for the permission to raise about $750 million to $1 billion by way of the ECB route. However, we may not go for ECBs before the second quarter,” said  Agarwal. Generally REC goes for ECBs worth $750 million every fiscal.

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