REC Limited Stays in Green in a Challenging Business Environment
The Board of Directors at REC Limited approved the audited financial results for Q4 FY18 and FY18, today. The Board has recommended a final dividend of Rs. 1.75 per share of Rs. 10 each.
Highlights – FY18 vs FY17
- Sanctions – Rs. 1,07,534 crore vs. Rs. 83,871 crore, up 28%
- Disbursements – Rs. 61,712 crore vs. Rs. 58,039 crore, up 6%
- Total Income – Rs. 22,440 crore vs. Rs. 23,771 crore
- Profit before Tax – Rs. 6,852 crore vs. Rs. 8,861 crore
- Profit after Tax – Rs. 4,647 crore vs. Rs. 6,246 crore
- Dividend for the year – Rs. 9.15 per share of Rs. 10 each
The Company witnessed an uptrend of 28% in the Loan Sanctions during FY18 as it approved loans amounting to Rs. 1,07,534 crore in FY18 as against Rs. 83,871 crore in FY17. Disbursements have also shown an increase of 8% at Rs. 61,712 crore in FY18 as compared to Rs. 58,039 crore in FY17. Given the healthy growth in the operational parameters, the loan book of the Company has increased 19% to Rs. 2.39 lakh crore as on 31st March 2018 as against Rs. 2.02 lakh crores as on 31st March 2017.
While the loan quality has been a key focus area, the Gross NPA levels rose from 2.99% in Q3 FY18 to 7.15% in Q4 FY18. Note, that the major chunk of additional NPAs is attributable to the Revised Framework issued by Reserve Bank of India on 12th February 2018 for Resolution of Stressed Assets, which superseded the existing guidelines on CDR/ SDR/ Change in ownership outside SDR, Flexible Structuring of Existing Long Term Project Loans (5/25 Scheme) and S4A scheme. While the notification is applicable to all Scheduled Commercial Banks (excluding Regional Rural Banks (RRB)) and all-India Financial Institutions (Exim Bank, NABARD, NHB and SIDBI), the guidelines per se are not applicable to the Company, being NBFC-IFC. However, REC has also followed these guidelines as a matter of prudence. Accordingly, loans amounting to Rs. 9,591 crore have been classified as NPAs. The Gross NPAs for the Company otherwise would have been 3.14%, without considering the impact of implementation of the above RBI guidelines adopted voluntarily by the Company.
Considering the income and expenses during the period, Company has registered a Profit after Tax of Rs. 4,647 crore for FY18, resulting in Earnings of Rs. 23.53 per share of Rs. 10 each. Book value per share stands at Rs. 179.71 per share.
The Company continues to reward its shareholders with healthy dividend payouts as the Board has recommended a final dividend of Rs. 1.75 per share of Rs. 10 each, which is in addition to an interim dividend of Rs. 7.40 per share declared in February 2018. Accordingly, the total dividend for the year amounts to Rs. 9.15 per share and the total payout on account of dividend for the FY18 amounts to Rs. 1,807 crore. The proposed final dividend will be paid to the shareholders after its approval in the Annual General Meeting of the Company.
Talking about the results, Dr. P.V. Ramesh, Chairman and Managing Director, said, “The Company has shown consistent performance, given the challenging times, both globally as well as in the domestic market. We have sanctioned more than Rs. 1 lakh crores worth of loans in FY18 alone in a moderated sentiment in line with our commitment towards business growth. As such, we continue to remain optimistic about the revival of the investment cycle in the power sector. With focused efforts, REC shall deliver consistent growth in the coming years.”