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Rural Electrification Corp Ltd (REC) is planning a follow-on public issue to raise funds. P Uma Shankar, CMD, REC, speaks to Moneylife’s Amritha Pillay about the company’s quarterly results and future plans
Amritha Pillay (ML): During the third quarter, your net profit rose by 49% to Rs474 crore. What were the factors responsible for this performance?
P Uma Shankar (PUS): The results have been good for two reasons—our disbursements have been really good and we also managed to keep borrowing costs down. During the third quarter, disbursements have gone up by 20% from the corresponding period last year. Therefore, good volumes and spread were the reasons for this performance.
ML: You mentioned that disbursements have gone up by 20%, resulting in good volumes. Since REC is a state-run entity, do you think it would have helped you in winning more projects from the government as private players were less privileged?
PUS: No, our being a state-run company didn’t figure in our winning more projects. In fact, there are more state-run power entities than private players. Over the past two years, we have been winning power projects that were sanctioned later. These power projects help us to boost our project pipeline and now it is maturing resulting in good volumes. Also, since we have been funding power projects for a long time, the experience and expertise we gained is no match for other players in the industry. Based on the projects in the pipeline, we will have more power projects coming up for disbursements over the next few quarters.
ML: REC is planning to buy stakes in coal mines and also in merchant power plants. But your main business has been transmission and distribution (T&D) and power finance. So what is the reason for this diversification?
PUS: No doubt, T&D is still our main business but since the past six to seven years, we started taking interest in large-scale power generation projects. In June 2002, REC’s mandate was expanded to all generation projects without limit on size or location from 25MW capacity. After studying T&D and power generation, we found out that you need to have a good recovery mechanism in place before financing such projects in order to minimise the risks.
Also, since we are soon coming out with a follow-on-public offer, I will not comment on the stake buying issue.
ML: What are the new, emerging trends in the power business? What does the future hold for this business in India?
PUS: So far, state-run utilities have been installing transmission lines, but I expect more private companies entering into this segment. Recently, the Indian government had asked REC to identify private bidders for constructing two transmission projects, and we did the job. We expect an increase in this kind of activity in the future. This type of arrangement also gives us another stream of revenue. Apart from recovering the project cost, we can also levy a success fee.
The kind of momentum we are witnessing in the power sector will help us to grow further. In addition, our two subsidiaries in the T&D segment will also help us to collect other fee-based revenues.
RCF is planning to expand its production capacity at its Thal-based facility. The expansion comes at a time when construction plans for its facilities in South Africa and Mozambique have been stalled
After a year of deliberation, India’s largest fertiliser maker by capacity and revenue, Rashtriya Chemicals and Fertilizers Ltd (RCF) has decided to enhance production capacity at its facility located at Thal near Mumbai, said a senior official.
"There is greater demand for urea from the agriculture sector which in turn made us to think about increasing production capacity at our Thal plant," said the official, who did not want to be named.
The state-run entity is planning to increase its urea production capacity to 3.15 million tonnes (MT) per annum from the current 2MT. According to sources, it may cost the company about Rs4,000 crore and RCF may conduct a feasibility and viability study in a year’s time.
There could be one more reason for the state-run company’s expansion plan based on the additional gas supply it would get from Reliance Industries Ltd’s Krishna Godavari (KG) basin. This could cut down the cost of production for urea. According to an agreement, RIL would supply 2.1 million standard cubic meters per day (MSCMPD) of gas to RCF’s Thal facility. Thal will also get gas from state-run Gas Authority of India Ltd (GAIL).
RCF has another facility at Trombay near Mumbai. However, due to logistical reasons, the company finds it easier to enhance production at the Thal facility rather than Trombay, the official said.
Earlier, RCF had one operating unit at Trombay and two prominent projects under implementation, the Trombay-IV Expansion and Trombay-V Expansion.
In 1985, RCF’s greenfield mega-fertiliser complex at Thal in Maharashtra became operational. It is running on full stream currently.
Nissan Motor has launched its iconic sports car 'Nissan 370Z’, the sixth generation of the Nissan Z-car line, at Rs53.50 lakh onwards
Nissan Motor India Pvt Ltd has launched its iconic sports car 'Nissan 370Z' in the country, priced between Rs53.50 lakh to Rs54.50 lakh (ex-showroom New Delhi). The 370Z is the sixth-generation of the Nissan Z-car line, succeeding the 350Z.
Kiminobu Tokuyama, managing director and chief executive, Nissan Motor India, said, "The 370Z is an authentic sports car that you don't have to make sacrifices to own—or drive—everyday. We believe that the 370Z will create an aspirational value for the Nissan brand in the country as we gear up for the launch of our first made-in-India car in 2010."
"The luxury car market in India has registered a fair amount of growth in the last few years and is growing at a significant rate every year. The emphasis has shifted from pure price consideration and affordability to design, quality and pleasure. The 370Z provides passionate performance at an excellent value—just what sports car enthusiasts are looking for today," said Abhijit Pandit, vice president for operations, Hover Automotive India Ltd.
The Nissan 370Z is powered by a standard 333 PS and 363 Nm Torque, VQ37VHR 3.7 L double overhead camshaft (DOHC) V6 engine with variable valve event and lift control (VVEL). The 370Z comes with a two-seat layout, built around a deeply scooped instrument panel with a full-length centre console separating the driver and passenger's seat. In the rear is an open cargo area with enhanced storage and accessibility.
The Nissan 370Z 6-speed M/T with Synchro Rev Match is priced at Rs53.50 lakh and the Nissan 370Z 7-speed A/T with Manual Shift Mode is priced at Rs54.50 lakh, both prices ex-showroom New Delhi.