REC Limited Joins Coveted 'Maharatna' Club
REC Limited has become the twelfth central public sector enterprise to get the ‘Maharatna’ status in the country.
The state-run power sector financier, REC Limited has been accorded the status of a ‘Maharatna’ central public sector enterprise (CPSE).
An order to this effect was issued last week by the Department of Public Enterprises, under the Ministry of Finance.
REC has become the 12th CPSE to get the ‘Maharatna’ status in the country. The other 11 Maharatna CPSEs at present are BHEL, BPCL, HPCL, IOCL, Coal India Ltd, GAIL (India) Ltd, NTPC, ONGC, Power Grid Corporation of India Ltd, SAIL and Power Finance Corporation.
The government of India accorded ‘Maharatna’ status to Power Finance Corporation Limited (PFC) in October 2021.
The CPSEs are granted Navratna, Miniratna and Maharatna status based upon a set of criteria laid down by the government.
The Maharatna dispensation was introduced in 2010 for mega CPSEs to become global giants.
For a company to be considered for grant of Maharatna status, it should be listed on an Indian stock exchange and have an average annual turnover of more than Rs 25,000 crore during the last three years.
It should also have an average annual net worth of more than Rs 15,000 crore during the last three years and an average annual net profit of over Rs 5,000 crore during the same period.
The CPSE should further have Navratna status and significant global presence/international operations, to be eligible for grant of Maharatna status.
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 per cent of the net worth of the concerned CPSE, limited to Rs 5,000 crore in one project.
Besides, the board can also structure and implement schemes relating to personnel and human resource management and training. With this, REC can also enter into technology joint ventures or other strategic alliances among others.
A non-banking finance company (NBFC), focusing on power sector financing and development across India, REC was established in 1969.
The company finances projects across the power sector value chain — generation, transmission or distribution. It provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.
In FY22, REC made its highest ever net profit of Rs 10,046 crore and reached a net worth of Rs 50,986 crore, owing to its cost-effective resource management and strong financial policies.
REC was designated as nodal agency for operationalisation of Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and SAUBHAGYA schemes. The two flagship schemes of the government of India have contributed towards achieving village and household electrification in the country.
The PSU is currently playing the role of nodal agency for revamped distribution sector scheme (RDSS), for revamping the distribution sector to alleviate the financial and operational issues.
DFI Status On Cards
The Centre is considering granting the status of a development finance institution (DFI) to REC Limited to enable the state-run company to steer global climate funding and net zero investment in the country.
In the annual general meeting of the corporation held on 16 September, the investors were apprised by the chairman and managing director Vivek Kumar Dewangan about the company's plans to diversify into energy transition and future technology funding.
"The estimated fund requirements for transitioning towards a net-zero economy would be around $3.5 trillion till FY50 and around $10 trillion till 2070, out of which a large share of investment will be required in the power sector," said Dewangan.
- DFI ,
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