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Expanding Portfolio, Multiplying Profits

PFC’s focus would continue to be on renewable business, refinancing and on expanding its T&D portfolio besides exploring newer areas

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Rajeev Sharma, Chairman & MD, Power Finance Corporation

Established in 1986, Power Finance Corporation is the financial back bone of India’s power sector. Its net worth as on 30 September 2018 is Rs 38,274 crore. PFC is the eighth highest profit-making CPSE as per the Department of Public Enterprises Survey for FY 2017-18. Chairman and Managing Director Rajeev Sharma has helmed PFC since October 1, 2016. Under Sharma, who has over 14 years of experience in financing the power sector and implementing the various power sector reforms, PFC has grown from strength to strength having notched up highest ever sanctions consecutively in FY17 and FY18 (more than Rs 1 lakh crore annually) and the highest ever disbursements consecutively in FY17, FY18 and FY19 (Rs 63,000 crore–Rs 68,000 crore annually).

During financial year 2018-19, PFC’s standalone net profit stood at Rs 6,952.92 crore, a whopping 58.5 per cent jump compared to Rs 4,386.76 crore posted a year ago. The company’s consolidated net profit in FY19 too saw a big jump of 43.69 per cent to Rs 12,640.27 crore, compared with Rs 8,796.69 crore in the previous fiscal. Total consolidated income rose to Rs 54,156.83 crore from Rs 48,645.42 crore in 2017-18.

Overall, the fourth quarter brought for the company  some fantastic numbers. Sample this: state-owned PFC reported more than a two-fold rise in its standalone net profits to Rs 2,117.56 crore for the quarter ended 31 March 2019, mainly on the back of reduction in the cost of funds and retiring of high-cost loans. The company had reported a net profit of Rs 796.35 crore in the corresponding quarter of the previous fiscal.

Its total standalone income for the January-March period increased to Rs 7,702.64 crore from Rs 6,254.96 crore a year ago. During the quarter, PFC’s total expenses stood at Rs 4,786.64 crore against Rs 5,186.48 crore in the fourth quarter of 2017-18, a reduction of around 7.7 per cent. 

Sharma is not new to either this sector or scaling up the companies he has spent time in. Prior to joining PFC, he was the CMD of Rural Electrification Corporation (REC). Under his leadership, REC scaled greater heights in excellence by doubling the revenues and profits in the last five years. Sharma holds a Bachelor’s in Technology (Electrical) and a Master’s in engineering from IIT Roorkee. He is also a management graduate from the prestigious Faculty of Management Studies of the Delhi university.

Brighter Outlook
As to the outlook and plans of PFC going forward, Sharma foresees a significant rise in the demand for energy considering India’s population and GDP growth. “There is a positive demand outlook. Then the government’s priority to increase the installed capacity of renewable energy to 175 GW by 2022 will continue to provide growth opportunity for PFC,” he says.

In terms of the loan portfolio, PFC’s focus will continue to be on renewable business, refinancing and on expanding its T&D portfolio.

Other areas the company is exploring to diversify its loan portfolio includes funding in electrical and hydro-mechanical components related to lift irrigation, sewage treatment plants, smart cities, e-vehicle manufacturing units including charging stations, electric charging infrastructure for promoting e-vehicles, battery manufacturing units for solar projects, mini and micro-grid for distributed generation, energy efficient systems like co-generation/tri-generation/combined heat and power and waste heat recovery systems.

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