REC Limited Faces Higher Expectations With Maharatna Status

By Saur News Bureau/ Updated On Thu, Sep 22nd, 2022

REC Limited was accorded the status of Maharatna Central Public Sector Enterprise on Wednesday, September 21, giving REC greater operational and financial autonomy. With this, REC joins the previous 11 PSU firms in the elite list as the 12th member.

An order to this effect was issued today by the Department of Public Enterprises, under the Ministry of Finance. Incorporated in 1969, REC is an NBFC focusing on Power Sector Financing and Development across India. REC, along with Power Finance Corporation (PFC), has been the primary vehicle for managing central funding and support for the power sector, especially the multiple DISCOM support packages in the past three years. The new status will improve discretionary powers for the management, bringing with it possibly greater scrutiny too for its actions.

The grant of ‘Maharatna’ status to REC will impart enhanced powers to the company’s Board while taking financial decisions. The Board of a ‘Maharatna’ CPSE can make equity investments to undertake financial joint ventures and wholly-owned subsidiaries and undertake mergers and acquisitions in India and abroad, subject to a ceiling of 15% of the net worth of the concerned CPSE, limited to INR 5,000 crore in one project. The Board can also structure and implement schemes relating to personnel and Human Resource Management and Training. They can also enter into technology Joint Ventures or other strategic alliances among others.

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Vivek Kumar Dewangan, CMD, REC said that REC achieved this feat owing to its adaptability, resilience and consistent performance even during the global covid-19 pandemic. “In FY22, REC made its highest ever net profit of INR 10,046 crore and reached a net worth of INR 50,986 crore, owing to its cost-effective resource management and strong financial policies. REC has played a key role in the success of the flagship schemes of the Government of India such as DDUGJY and SAUBHAGYA and has contributed towards achieving village and household electrification in the country. REC is currently playing the role of nodal agency for Revamped Distribution Sector Scheme (RDSS), for revamping the distribution sector to alleviate the financial & operational issues. We thank all of our stakeholders who have placed their trust in the company, and especially our employees who have offered their unwavering support for over five decades of our operations. We express our heartfelt gratitude to the Ministry of Power whose guidance and support have been key in making this accomplishment possible,” Dewangan said.

REC has financed over 10,000 MW of renewable energy till date, and is heavily exposed to state DISCOMs as their financier of choice.

Thanks to its heavy exposure to state DISCOMs , REC Limited has not really been valued at par with peers in the financial sector despite turning out solid results, and announcing regular dividends and a bonus share issue recently.