THIRUVANANTHPURAM: KSEB Ltd, already operating under significant financial strain, has secured a Rs500 crore short-term loan from REC Ltd for meeting its working capital requirements.
The loan has already been availed by KSEBL a few months ago due to urgent requirement.
REC Ltd has recently refinanced over Rs1,000 crore, the entire loan of the financially struggling Kannur International Airport Ltd (KIAL), with better terms on interest as well as tenure compared with the earlier terms agreed with the original lenders – Canara Bank, Federal Bank and South Indian Bank (SIB).
Pricing at 8.94%
Though REC Ltd has earlier agreed on an interest rate of 8.99 per cent for the KSEB loan, later it has been reduced by 5 basis points to 8.94 per cent.
KSEB has stated that the 8.94 per cent interest rate on the loan effectively carries a rebate of 81 basis points compared with the current applicable interest rate of 9.745 per cent.
KSEBL already has a borrowing of Rs17,391 crore as of June end, down from Rs18,293 crore as of end-FY24.
6 months moratorium
As per the terms on the REC loan to KSEB, there will be a monthly reset of interest rates after the grace period of 12 months, and also a six months moratorium.
Considering the urgent requirement of funds to meet the power purchase obligation, the director of Finance, KSEBL had accorded sanction to avail a loan amount of Rs300 crore on August 2, 2024 and the remaining Rs200 crore on September 2, 2024.
KSEBL, unlike in several past quarters, has earned a net profit of Rs184.55 crore for the quarter ended June 2024.
The state’s lone power distributor, KSEBL, carries a huge accumulated losses in its books and this has plunged the company into a whopping negative net worth of Rs33,124 crore as of June 30, 2024.
The state’s public sector undertakings are going through a tough period, as the state is found itself in a tight spot with regard to extending guarantees to the state-owned enterprises for availing loans.
