REC plans to disburse Rs 1.35 lac cr in 11th plan

REC plans to disburse Rs 1.35 lac cr in 11th plan Rural Electrification Corporation, REC, a state run company, is coming out with an initial public offering of 15.6 crore shares to raise nearly Rs 1404.9-1639.05 crore at a price band of Rs 90-105 per share, respectively. The issue will open for subscription on February 19 and close on February 22, 2008. Anil Kumar Lakhina, Chairman & MD of Rural Electrification Corporation, said the business is growing at a much higher rate than indicated. They intend to disburse about Rs 135,000 crore in the eleventh plan. Excerpts from CNBC-TV18's exclusive interview with Anil Kumar Lakhina: Q: Give us an idea of the kind of business opportunity in terms of lending and what you are in pursuit of currently? A: Our debt equity is in the range of 1:8, we have lent about Rs 35,000 crore to the market in the generation transmission and distribution sectors and we want to lend more money to meet the targets that are set out in the eleventh plan and for that we are in the market. So that our equity portion goes up. Q: How much do you think this Rs 35,000 cr will go up during the eleventh plan, which is proposing to add over 78,000 MW? Do you think that you could probably see a 15-30% plus jump in this figure of lending? And consequently, what would be the cost of funds that you are lending these amounts up to projects that are coming up in these plans? A: We are growing at a much higher rate than what we have indicated. We intend to disburse about Rs 135,000 crore in the eleventh plan. Our cost of funds so far has been pretty attractive and our average cost of borrowing is at the rate of 6.5. Q: The possibility of the government considering relaxing external commercial borrowing from companies like yourselves, what has been the presentation that you have made to them and that you would be able to avail of it, if this comes through via the automatic route? A: We have already raised USD 200 million last year through the ECB route. So far, the Reserve Bank of India has not yet decided to allow us this route, but in the power sector many machines are imported, which will desirably make a pitch to the Reserve Bank to get this route open to us so that our cost of lending remains competitive.