Summery: Rural Electrification Corporation Limited (REC) Makes A Transition To Indian Accounting Standards, Declares Its First Ind-As Financial Results For Q1 Fy19, Net Profit – Rs. 1,469 Crore, Eps – Rs. 7.44 For Q1 Fy19
The Board of Directors at Rural Electrification Corporation Ltd. approved the unaudited standalone financial results for Q1 FY19 today. As per the roadmap notified by the Ministry of Corporate Affairs (MCA), the Company has adopted Indian Accounting Standards (Ind-AS) w.e.f. financial year 2018-19 and presented its first Ind-AS Compliant financial results.
Highlights – Q1 FY19 vs Q1 FY18
- Total Income – Rs. 6,319 crore vs. Rs. 5,628 crore
- Profit before Tax – Rs. 2,111 crore vs Rs. 1,401 crore
- Net Profit – Rs. 1,469 crore vs Rs. 1,076 crore
The Total Income of the Company during Q1 FY19 has been Rs. 6,319 crore, as against Rs. 5,628 crore in Q1 FY18. Consequently, the Net Profit for the Company has increased by 37% from Rs. 1,076 crore in Q1 FY18 to Rs. 1,469 crore in Q1 FY19. The Earnings per Share (EPS) during Q1 FY19 has also increased to Rs. 7.44, in comparison to EPS of Rs. 5.45 during Q1 FY18. In spite of the challenging business environment, the loan book of the Company has shown a healthy increase of 16% and has grown to Rs. 2.42 lakh crore as at 30th June 2018, as against Rs. 2.08 lakh crore as at 30th June 2017.
The loan quality has always been a key focus area of the company. Considering the paradigm shift in the loan provisioning methodology under the Indian Accounting Standards, the Expected Credit Loss (ECL) evaluation & calculation was undertaken through an independent agency, IRR Advisory Services Pvt. Ltd., a Fitch Ratings Group Company. Consequent to the implementation of ECL methodology, the Provision Coverage Ratio against the credit-impaired assets has improved to 47.41% as at 30th June 2018. The Net NPA levels have also fallen to 4.27% in Q1 FY19 as compared to 5.68% as per IGAAP in Q4 FY18. Further, there are no indications of credit impairment in the loans to Govt. sector, forming 86% of the loan book.
Post the implementation of Ind-AS, the Net Worth of the Company stands at Rs. 32,478 crore as at 30th June 2018. Even while the RBI Guidelines have required government NBFCs to increase the Capital Adequacy requirements to a minimum of 15% by 31st March 2022, the company is already compliant of the same with the current Capital to Risk Weighted Assets Ratio (CRAR) of 16.66% as at 30th June 2018.
During the current quarter, The President of India, acting through Ministry of Power (MoP) divested a portion of their shareholding in the company through Follow-on Fund Offer (FFO) of Bharat-22 ETF and the shareholding of the Govt. of India stands at 57.99% as on date as against 58.32% as on 31st March 2018.
Talking about the results, Dr. P.V. Ramesh, Chairman and Managing Director, said, “The Company has delivered a steady performance during the current quarter, even while the domestic and global factors have been challenging. Our focus continues to be on the renewable segment which is emerging as a major driver for sustainable growth. We also continue to remain optimistic about the resolution of the stressed assets.”
About the Company:Rural Electrification Corporation Ltd., a Navratna CPSE is one of the key players financing power sector in India and lends to the players across the power sector value chain.