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PFC to buy-back 20% equity before current fiscal ends

Our Bureau

NEW DELHI, Jan. 18

POWER Finance Corporation (PFC) is planning to buy back 20 per cent of its equity from it sole owner, the Government, before the end of the current fiscal, according to the PFC Chairman and Managing Director, Dr. Uddesh Kohli.

Addressing a press conference here on Tuesday, Dr. Kohli said the book value buy-back transaction amounts to Rs. 570 crores and would result in the corporation's debt-equity ratio rising from the current 1.86 to 3.0 post buy-back.

According to the PFC Director (Finance), Mr. T.N. Thakur, the resultant reduction in equity capital will be in line with the recommendations of the Narasimham Committee, appointed to study the working of PFC.

Elaborating on the proposal, Mr. Kohli said if the company were to disinvest its equity in the market following a buy-back, the share value would be greater than the buy-back book value price. Hence, the confidence of PFC's lenders would be enhanced. He, however, hastened to add that there was no move to disinvest following the buy-back.

Earlier, at an extraordinary general meeting (EGM) on November 30, 1999, the PFC board had amended its Articles of Association to enable buy-back of equity capital from its sole owner.

As on March 31, 1999, PFC had a paid-up capital of Rs. 1,030 crores and reserves and surplus of Rs. 1,767 crores.

For the current fiscal up to December 31, 1999, PFC achieved a gross margin of Rs. 786 crores, up from Rs. 702 crores achieved during the same period last fiscal.

Profit after tax (PAT) stood at Rs. 659 crores as against Rs. 584 crores during the same period last fiscal.

The main lending programme, the Accelerated Generation and Supply Programme (AG&SP) accounted for nearly half the sanctioned amount of Rs. 5,725 crores for the current fiscal up to December 31, 1999.

The AG&SP programme covers renovation and modernisation, life extension, on-going generation projects, and augmentation of supply.

According to an official release, the AG&SP programme has supported 5113 MW of new capacity addition by State power utilities, accounting for 51 per cent of total projected capacity addition in the State sector in the Ninth Plan period.

During the current fiscal up to December 31, 1999, sanctions stands at Rs. 5,725 crores, as against Rs. 3,339 crores during the same period in the previous fiscal.

On the policy front, the PFC board would now enjoy grater investment powers as it would not require to take the Government's permission for borrowing up to a limit set in the performance MoU with the Government.