H. D. Khunteta, CMD, Rec, talks to Karan Arora on Moving to Transmission Financing & Foreign funding Instruments
B&E: REC in recent times has shifted the focus to fund power projects including generation. How important is this shift?
HDK: While traditionally funding for development of country’s transmission and distribution system with focus on rural electrification projects and with minuscule portfolio of mini-micro generation projects up to 25MW, the break came in 2002. Given the constraints in funds requirement for the sector, the Ministry of Power expanded the mandate of REC to include generation projects as well and that too without any cap on size and location.
B&E: What has been your loan book growth this time around despite higher cost of funds? And what are the challenges that you perceive to your margins?
HDK: MoU for 2011-12 loan disbursement expected to increase in loan book growth is 23%. Like in earlier years, the company expects to maintain the margins with a better mix of funds. Higher interest rates, uncertainty about fuel supply to the funded projects and competition generated by the commercial banks are challenges that we face.
B&E: Given the constraints on bank lending to the infrastructure sector, rural infrastructure funding holds a great potential. What are the company’s growth plans for the coming years?
HDK: Considering the huge fund requirement in the power sector, REC has a target to maintain its growth at 15-20% in years to come. The growth of demand each year as articulated in the 11th Plan documents lower growth in disbursement of funding by REC. The disbursements are commensurate with the ever growing sanctions of projects and its implementation pace & are expected to grow at the same levels.
HDK: While traditionally funding for development of country’s transmission and distribution system with focus on rural electrification projects and with minuscule portfolio of mini-micro generation projects up to 25MW, the break came in 2002. Given the constraints in funds requirement for the sector, the Ministry of Power expanded the mandate of REC to include generation projects as well and that too without any cap on size and location.
B&E: What has been your loan book growth this time around despite higher cost of funds? And what are the challenges that you perceive to your margins?
HDK: MoU for 2011-12 loan disbursement expected to increase in loan book growth is 23%. Like in earlier years, the company expects to maintain the margins with a better mix of funds. Higher interest rates, uncertainty about fuel supply to the funded projects and competition generated by the commercial banks are challenges that we face.
B&E: Given the constraints on bank lending to the infrastructure sector, rural infrastructure funding holds a great potential. What are the company’s growth plans for the coming years?
HDK: Considering the huge fund requirement in the power sector, REC has a target to maintain its growth at 15-20% in years to come. The growth of demand each year as articulated in the 11th Plan documents lower growth in disbursement of funding by REC. The disbursements are commensurate with the ever growing sanctions of projects and its implementation pace & are expected to grow at the same levels.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
