Issue opens on 19/2/2008 Issue closes on 22/02/2008 Website :- www.recindia.nic.in
Price Band Rs. 90-105/- Minimum Bid Quantity 60 shares Face Value Rs. 10/-
Background:-
Usage of the money from issue proceeds :-
Strengths of the company:-
Valuations of the company :-
·Operating (Interest) Income has grown at CAGR of 7% from Rs 2,033 cr in FY 03 to Rs 2,651 cr in FY 07. The same was Rs 1,561 cr for the half year ended September 30, 07.
·Net Profit has grown at CAGR of 1.40% from Rs 735 cr in FY 03 to Rs 777.55 cr in FY 07. The same was Rs 523.08 cr for the half year ended September 30, 07.
·NPM has decreased from 32% in FY 03 to 26.5% in FY 07. The same was 29.2% for the half year ended September 30, 07.This reduction in NPM is on account of increased interest liability.
·Interest expenses to Total income has increased from 5.2% in FY 03 5.9% in FY 07 whereas Other expenses to Total income has decreased from 3.80% in FY to 3.70% in FY 07.
·Cost of funds on average interest bearing liability has decreased from 8.20% in FY 04 to 6.40% in FY 07.
·Net Interest Income has increased from Rs 818 cr in FY 03 to Rs 914 cr in FY 07. The same was Rs 592 cr for the half year ended September 30, 07.
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·Rural Electrification Corporation Ltd. (RECL) was incorporated in 1969 as Rural Electrification Corporation Pvt Ltd. to finance rural electrification schemes in the country. It became public in 1975 and finally in 2003 the company’s name changed to present one.
·RECL is a leading financial institution in Indian power infrastructure and plays key role in Government of India (GOI) plans to improve the power situation in India. It is engaged in the financing generation, transmission & distribution projects throughout India in terms of long-term loans, short-term loans, bridge loans and debt refinancing.
·RECL has 17 project offices across the country through which it operates its loan appraisal, loan sanction and post-sanction monitoring.
·Currently it provides loans for Rajiv Gandhi Gramin Vidyut Yojna (RGGVY) that focus on electrification of all villages.
·RECL’s clientele include public sector power utilities at the state & central levels and private sector power utilities.
·Top ten borrowers constituted 52.68% of the total loans outstanding as on September 30, 07. The above borrowers include Punjab State Electricity Board, Maharashtra State Electricity Distribution Company Ltd., Andhra Pradesh Transmission Co., Tamil Nadu State Electricity Board, Tehri Hydro Electric Development Corp, Andhra Pradesh Power Generation Corp. Ltd, Uttar Pradesh Power Corp.Ltd., Chhattisgarh State Electricity Board, Maharashtra State Electricity Transmission Corp. Ltd, and Jodhpur Vidyut Vitran Nigam Ltd.
·Transmission constituted 58.43% & 58.03%, Generation constituted 23.37% & 26.90% and others constituted 18.20% & 15.07% of the total loans out standing in FY 07 & half year ended September 30, 07 respectively.
·RECL has been accorded ‘Mini Ratna Grade -I’ status by GOI.
·RECL holds long term credit rating of AAA/Stable, LAAA, AAA (ind),CARE AAA from CRISIL Ltd., ICRA Ltd., Fitch and CARE Ltd. Also, it holds international rating of BBB and Baa3 from Fitch and Moody.
·RECL has four subsidiaries namely REC Transmission Projects Company Ltd., REC Power Distribution Company Ltd., North Karanpura Transmission Company Ltd, Talcher II Transmission Company Ltd.
·Post issue President of India’s shareholding will reduce to 82%.
·To increase capital base to meet the future capital requirements arising out of growth in assets, primarily loan and investment portfolio.
·To fund expenditure for general and corporate purposes & issue related expenses.
·Company is currently having high ratings for its issued bonds from Moody's,Fitch,ICRA,CRISIL which will help the company to raise funds for financing purpose to new power projects in the future.
·Debt-Equity ratio has decreased from 16.23 in FY 04 to 8.22 in FY 07 mainly due to increase in Reserve & Surplus.
·BV per share (calculated by taking Face Value of Rs 10) has increased from Rs 3.72 in FY 03 to Rs 47.18 in FY 07 on account of increase in Reserve & Surplus.
·Gross NPA’s as percentage of total Loan assets has reduced from 10.97% in FY 04 to 2.39% in FY 07. The same was 0.90% for the half year ended September 30, 07.
·ROE has decreased from 25% in FY 06 to 21% in FY 07 on account of continuous increase in Reserve& Surplus account.
·ROA has decreased from 5% in FY 03 to 2.15% in FY 07.
·Yield on average interest bearing assets has decreased from 11.6% in FY 04 to 9.29% in FY 07.
·Net Interest Margin has decreased from 4.25% in FY 04 to 3.20% in FY 07.
