Public sector infrastructure finance major Rural Electrification Corporation has reported a ₹1,214.66-crore net profit for the second quarter of the financial year 2017-2018. This is 30 per cent lower than the ₹1,751.27-crore bottomline reported by in the corresponding period of the last financial year. The company’s total revenue for the quarter too, came down from ₹6,108.55 crore in the same quarter of the last financial year to ₹5,627.71 crore in the quarter under consideration.

REC Chairman P V Ramesh said that it will not be appropriate to compare the quarterly results to the same quarter of the last financial year as the second quarter of the financial year 2016-2017 was exceptional.

“Under UDAY, there were prepayments of ₹44,000 crore. This was high cost capital which we borrowed, which was prepaid to us without a prepayment premium which we had to lent at a lower level in order to keep the wheels moving. Second, there is a lot of liquidity in the banking sector and the banks lend at a lower rate,” he told BusinessLine .

The Interest Coverage Ratio for REC fell to 1.55 till September end this year. This stood at 1.71 for the same period in the last financial year. Responding on the same, REC Director (Finance), Ajeet Agarwal, said: “We have been working at very healthy margins in the past. Generally, a ratio of 1.1 or 1.2 is considered to be quite good. Though we did operate at a ratio or 1.7 and 1.6 in the past, today we are working at 1.55. It is also a very healthy interest coverage ratio for Non-Banking Financial Firms.”

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