Ladies and Gentlemen,
It gives me great pleasure to welcome you all to the 33rd Annual General Meeting of your Company. Financial Year 2018-19 was an eventful and a landmark year in the history of PFC. 281h March 2019 was a Red Letter Day in the history of PFC, when your Company acquired Government of India''s 52.63% equity stake in REC Limited (formerly Rural Electrification Corporation Limited), for a total consideration of Rs, 14,500 Crs. With this landmark deal, PFC is now a promoter and the holding company of REC Limited.
The acquisition is a significant move towards power sector consolidation and significant inorganic growth opportunity for PFC, which has resulted in creation of bigger entity on a consolidated basis, with combined annual revenues of more than Rs, 50,000 Crs, loan assets of Rs, 6 lakh Crs and profit of more than Rs, 12,500 Crs. The acquisition would enable increased efficiencies in lending processes and policies across both the institutions and would create public value by offering better loan products to the power sector. Further, the acquisition will help in diversification of assets of the group as well as better management of portfolio risk and would also help in resolution of stressed power sector assets of the group in a better and coordinated manner.
I am pleased to share that post the acquisition transaction, PFC''s credit rating has been retained and your company has also kept the Capital Adequacy Ratio at comfortable levels to reassure shareholders, investors & credit rating agencies about the business growth going forward.
On the business front, the year also saw some significant landmarks for PFC on a standalone basis. We achieved our highest ever annual profit of about Rs, 7,000 Crs. Your company has recorded its highest ever disbursements for three years in a row and with this year''s loan disbursements crossing Rs, 67,600 Crs mark. The loan assets also crossed the Rs, 3 lakh milestone and saw a robust growth of 13% during the year.
On the borrowing front, the share of foreign currency borrowings in the overall borrowing increased to 10% on the back of fresh foreign currency mobilization of USD 1.5 billion during the year. In June 2019, PFC raised USD 1 billion under its MTN programme with 5 years and 10 year tenors, which was the first dual and largest USD bonds transaction for Government owned Indian NBFC and also the first 5 year issuance by PFC. Going forward, we expect the foreign currency borrowings to contribute to our portfolio to a greater extent. As indicated earlier, 54EC Capital Gain Tax bonds are an important source of funds for PFC owing to its low cost. I am happy to share that the mobilization under the capital gains tax bonds has witnessed a 2.7 time jump from the previous financial year. Due to the various efforts made by your company on the borrowing front, the cost of funds has reduced significantly from 8.21% in FY18 to 7.95% in FY19.
A decisive majority for NDA 2.0 under the leadership of Prime Minister Shri Narendra Modi would only add to India''s political and economic muscle in the comity of nations. The Government''s commitment to an ''all inclusive economic and socially harmonious'' order would further the cause of spreading prosperity and a spirited campaign against poverty in line with United Nation''s millennium development goals. Taking the economic growth story to rural India would be natural extension of the country''s journey thus far.
With a healthy GDP of around 7% in the last five years, India''s economic profile has never been better globally. Liberal policies adopted by the central government have only lent an edge to India as an attractive investment destination amongst emerging markets. Stabilization and reduction in Goods and Services Tax (GST) rates across product categories seem to have enthused investors within and outside the country. Strong domestic consumption demand has provided a big fillip to industry, services, farm sector and exporters laying a firm foundation for long haul investments. Various government initiatives like ''Make In India'' & ''Digital India'' have given opportunities to foreign companies for setting up their facilities in India.
India''s famed labour force is expected to touch 170 million by next year, turning the country into a powerhouse for human resources and key supplier of manpower internationally. Leveraging the demographic potential also seems to have begun in the right earnest with pan-India skills development campaign taken up by centre in partnership with state governments, corporate world and other stakeholders.
India is firmly on its way to catapult into the big league. It''s all set to become the third largest economy in 10-15 years backed by strong democracy and partnerships. India''s GDP is expected to reach USD5 trillion in next few years and achieve upper-middle income status on the back of digitization, globalization, favorable demographics and reforms.
The growth of Indian economy has been supplemented by the power sector despite facing several challenges. Now every village has access to quality and affordable electricity while power to every family has become a near reality. Energy deficit has been reduced to almost zero and India emerges as net exporter of electricity to Nepal, Bangladesh and Myanmar. More than 1,07,000 MW Generation Capacity has been added between April 2014 and March 2019. These developments coupled with a huge capacity creation in renewable and new energy resources have provided a great business opportunity to your Company. Under Saubhagya, a flagship scheme of Government of India, almost 100% household electrification has been achieved. More than Rs, 34,000 Crore interest cost has been saved by DISCOMs under UDAY within two years. Providing electricity to all, round the clock, 365 days a year has become the next big challenge that''s being tackled head on.
Various steps have been taken by Government of India to tackle the issue of stressed assets in Power Sector. Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) was launched to provide coal to the stressed power projects. SHAKTI covers projects which have PPAs but do not have Fuel Supply Agreements in place and also those which do not have Power Purchase Agreements (PPAs). The objective of this scheme is to eliminate the stress in generation utilities. Some of these stressed projects have already started to receive coal under the scheme. Also, a Pilot Scheme for mid-term PPA for stressed projects was launched by the Ministry of Power for which PFCCL, our subsidiary company is the Nodal Agency and PTC is the aggregator to purchase power for three years from commissioned projects with no PPA. Under the scheme, beneficiary states have signed PPAs for 1900 MW with eligible bidders at a tariff of Rs, 4.24 per unit. Now Phase II of the Pilot PPA scheme has been launched with PFCCL as the Nodal Agency and NHPC as the aggregator. Bids from 15 companies have been finalized with a tariff of Rs, 4.41 per unit. Ministry of Power has also issued significantly important guidelines with respect to timelines for approving the petitions for tariff increase due to change in law and also the directions mandating the power distribution licensees to open and maintain adequate Letter of Credit as a payment security mechanism under Power Purchase Agreements. These initiatives will help the projects to sell power on sustainable basis and resolve the stress going forward.
I am pleased to share that under these schemes some of the projects financed by PFC have received coal linkages and also mid-term PPAs, which will help in resolution of stress.
In order to encourage Renewable Generation, Ministry of Power extended the waiver of ISTS Transmission charges and losses for Solar & Wind based Projects up to March 2022. Further, in order to achieve the Renewable target of 1,75,000 MW of Renewable Capacity by 2022, MOP issued Long Term Growth trajectory Renewable Purchase Obligation (RPO) for Solar as well as Non-Solar till the year 2022.
India''s rank improved to 24 in 2018 from 137 in 2014 on World Bank''s Ease of doing business - Getting Electricity Ranking. Several measures have been initiated to reform and strengthen the power sector as a whole including power generation, transmission and distribution. These also include achievements in capacity addition and also important reforms being undertaken for increasing energy efficiency and increasing accountability and transparency by launching Mobile applications like PRAAPTI, Ash Track etc.
Your Company''s philosophy of Corporate Governance stems from its belief that the spirit of good governance lies in adherence to highest standards of transparency, accountability, ethical business practices, compliance of law in true letter and spirit, adequate disclosures, corporate fairness, social responsiveness and commitment to the organization to meet stakeholders aspirations and societal expectations.
Your Company is a socially responsible corporate entity which is committed to improving the quality of life of the society at large by undertaking projects for Sustainable Development. PFC''s focus on the CSR front has been on the projects for national as well as local importance. Some of the projects like skill development for economically and socially backward men and women, installation of solar street lights, provision for medical equipment etc. have a wide reaching impaction our society as a whole. Your company has disbursed Rs, 118 crore under the CSR activities in FY19.
I am extremely thankful to the shareholders, who have reposed faith in us. My sincere and heartfelt thanks go out to the Hon''ble Union Minister of State (l/c) for Power & New and Renewable Energy and officials of the Ministry of Power for their continued support and guidance. I am also truly grateful to Board of Directors, Investors and Valued Clients for their support.
I also convey my gratitude to Ministry of Finance, Reserve Bank of India, Department of Public Enterprises, Securities and Exchange Board of India, National Stock Exchange of India Limited, Bombay Stock Exchange Ltd., NITI Aayog, CEA, C&AG, Statutory Auditors, Internal Auditors, Registrars, various Commercial Banks, Financial Institutions, Credit Rating Agencies and other concerned Government Department/ Agencies at the Central and State level for their continued support. I also appreciate the continuous and unwavering support by our partners in the Print and Electronic Media.
Finally, I must thank all the employees without whose continuous and untiring efforts none of this would have been possible.
Chairman & Managing Director