State-owned power sector financing entity Power Finance Corporation (PFC) wants to transform itself into a complete solution provider to power companies by diversifying into new power-related areas such as insurance services, asset acquisition advisory services and rating services. The `8,000-crore company hopes to leverage its loan relations with power projects to tap into other revenue streams in an attempt to boost fee-based income. Finance and project advisory is a big concern for the numerous new entrants in the power sector, an opportunity PFC hopes to capitalise on by offering end-to-end solution for putting together a power business. “There is a lot of scope for diversification while remaining committed to meet the funding needs of the power sector,” PFC chairman and managing director Satnam Singh told ET.
In a total turnover of `8,000 crore, the company had other income, or what would be non-interest income, at `72 crore in 2009-10. A higher fee-based income should increase the share of other income, pushing up the profit margin of the company, which already stands at a healthy 30%.
The consultants hired by the company for advising on new initiatives have given a thumbs up to the diversification plan, which now awaits a nod from the power ministry for further action. The company is likely to create separate business units for each area of activity it wants to get into and may later carve them out as separate subsidiaries.
Initially, PFC would consider a foray into power project insurance and underwriting business and may also get into commercial rating service to facilitate projects to get bank financing. “We are also providing rating of projects in annual reports. This would now become a separate business unit offering this specialised services to projects,” a PFC official said.
Two subsidiaries are already being finalised for consortium financing and green-energy funding. A separate business unit is also proposed to be created within PFC for offering asset acquisition advisory services.
This unit will basically provide complete services from concept to commissioning to any other entity interested in buying out an existing property in the power sector. PFC will conduct due diligence of behalf of its clients, work out valuations, advise on acquisitions and even help in organising people and equipment for commissioning projects.
PFC is looking at opportunities to fund projects in countries like Nepal and Bhutan by putting together a team for servicing global markets. On the funding side, it could provide loan for peripheral activities connected with power projects such as coal handling and transportation, wagon purchases, etc.
To create a vast pool of skilled manpower for the power sector, PFC is also setting up a centre of excellence in Sonepat. The centre will offer programmes with specific needs of power projects.
In a total turnover of `8,000 crore, the company had other income, or what would be non-interest income, at `72 crore in 2009-10. A higher fee-based income should increase the share of other income, pushing up the profit margin of the company, which already stands at a healthy 30%.
The consultants hired by the company for advising on new initiatives have given a thumbs up to the diversification plan, which now awaits a nod from the power ministry for further action. The company is likely to create separate business units for each area of activity it wants to get into and may later carve them out as separate subsidiaries.
Initially, PFC would consider a foray into power project insurance and underwriting business and may also get into commercial rating service to facilitate projects to get bank financing. “We are also providing rating of projects in annual reports. This would now become a separate business unit offering this specialised services to projects,” a PFC official said.
Two subsidiaries are already being finalised for consortium financing and green-energy funding. A separate business unit is also proposed to be created within PFC for offering asset acquisition advisory services.
This unit will basically provide complete services from concept to commissioning to any other entity interested in buying out an existing property in the power sector. PFC will conduct due diligence of behalf of its clients, work out valuations, advise on acquisitions and even help in organising people and equipment for commissioning projects.
PFC is looking at opportunities to fund projects in countries like Nepal and Bhutan by putting together a team for servicing global markets. On the funding side, it could provide loan for peripheral activities connected with power projects such as coal handling and transportation, wagon purchases, etc.
To create a vast pool of skilled manpower for the power sector, PFC is also setting up a centre of excellence in Sonepat. The centre will offer programmes with specific needs of power projects.
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