REC board approves raising ₹1.55 lakh crore via bonds
Rural Electrification Corporation (REC), a state-owned firm, informed investors through an exchange filing today that its Board of Directors has approved a proposal to raise funds through the private placement of unsecured/secured non-convertible bonds/debentures of up to ₹ 1,55,000 crore, subject to shareholders' approval at the ensuing Annual General Meeting.
The company said the funds will be raised in one or more tranches over a period of one year from the date of the shareholders' resolution, with the approval of the competent authority.
In addition to approving the fundraising plan, the board also approved a proposal to strike off an SPV, namely Rajgarh II Power Transmission Limited, a wholly owned subsidiary of REC Power Development and Consultancy Limited (RECPDCL), which is itself a wholly owned subsidiary of REC, subject to requisite clearances, concurrences, or approvals from statutory/administrative authorities, wherever required.
REC Power Development and Consultancy Limited (RECPDCL), a wholly owned subsidiary of REC, had set up a special purpose vehicle (SPV) named Rajgarh III Power Transmission Limited to implement the 'Transmission System for Evacuation of Power from RE Projects in Rajgarh (1500 MW) SEZ in Madhya Pradesh – Phase III,' as recommended by the National Committee on Transmission (NCT).
The SPV was formed under the Tariff Based Competitive Bidding (TBCB) guidelines to carry out the bidding process.
However, the company said that NCT later recommended clubbing the Rajgarh Phase III project with another transmission project. Following this, the Ministry of Power de-notified the Rajgarh Phase III project via a notification dated March 18, 2025. As a result, since the SPV no longer has any operational purpose, RECPDCL has proposed to strike off Rajgarh III Power Transmission Limited.
The company's shares have continued to remain under pressure for the past 10 months, losing 38% of their value, falling from ₹ 644 apiece to the current level of ₹ 400. Between March 2023 and July 2024, however, the stock witnessed a one-way rally without any pullback, delivering a massive return of 465% to shareholders.
For the quarter ended March, the company reported a 5.6% year-on-year (YoY) increase in its consolidated net profit at ₹ 4,309 crore, while net interest income (NII) rose 38% YoY to ₹ 5,877 crore, compared to ₹ 4,273 crore in the corresponding quarter of the previous fiscal.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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