REC (RECLTD) Q4 06/07 earnings summary

Executive summary

• Record FY07 performance: loan sanctions Rs.32,925 crore, disbursements Rs.13,733 crore, operational income Rs.2,651.70 crore and PBT Rs.1,006.19 crore.

• PBT rose 21% YoY and PAT rose to Rs.660.26 crore from Rs.637.51 crore; deferred tax and bad-debt provisions constrained PAT growth.

• Growth priorities broadened beyond rural electrification into generation, transmission, distribution and consultancy, supported by new subsidiaries and planned international expansion.

Financial highlights

• Loan sanctions increased 75% YoY to Rs.32,925 crore; disbursements increased 71.5% to Rs.13,733 crore and recoveries rose 21% to Rs.6,584.67 crore.

• Gross income was Rs.2,854.00 crore versus Rs.2,245.06 crore; operational income grew 28% to Rs.2,651.70 crore.

• PBT was Rs.1,006.19 crore versus Rs.829.83 crore; PAT was Rs.660.26 crore versus Rs.637.51 crore.

• Proposed FY07 dividend was Rs.177 crore, after Rs.379 crore of appropriations to statutory reserves.

Outlook and guidance

• 11th Plan power-sector investment requirement was projected at Rs.10,00,000 crore in the Chairman’s speech; the outlook section cited Rs.10,31,600 crore and 78,577 MW of required capacity additions for 2007–12.

• Electrification work was targeted in another 40,000 villages in FY08; 40,233 villages were completed in FY07 against a 40,000 target.

• Through 31 Aug 2007, generation loan sanctions reached Rs.11,566.79 crore across 18 projects; related disbursements were Rs.1,071.63 crore.

• Long-term prospects were tied to power demand, sector reforms, rural-electrification targets and a diversified lending portfolio.