PFC Q3 net down 12 pc to Rs 3,386 cr

State-run Power Finance Corporation reported a 12 per cent dip in consolidated net profit at Rs 3,386.72 crore in the December quarter, mainly on account of higher tax outgo and non-receipt of dividend from REC. The company's net profit stood at Rs 3,876.17 crore in the year-ago quarter, a BSE filing said.

During April-December, consolidated net profit was at Rs 8,783.55 crore as compared with Rs 9,249.01 crore a year ago. The company said that the profit for nine months ended December 31 was lower as the company opted for reduced corporate tax rate of 25.17 per cent from April 1, 2019, but had to give up exemptions and deductions.

The Finance Ministry had in September 2019 slashed corporate tax rates to 25.17 per cent (from 34.94 per cent) effective from April 1, 2019. "Going forward, this is expected to provide significant tax savings for PFC. However, the Deferred Tax Asset (DTA) recognised prior to April 2019 has been made at earlier corporate tax rate of 34.94 per cent. Therefore, now it has been re-measured with lower tax rate," PFC said.

"Accordingly, the additional DTA has been charged to profit and loss. Thus, considering tax savings and DTA impact, there is a net increase in tax expense of Rs 319 crore in current 9 months, having a negative impact on our profits," it added. Further, it said the profit was also impacted as it received no returns in the nine months ended December on the acquisition price it paid for REC.

The return available on such investment is in the form of dividend, which is generally received in lump sum. It said, "Till nine months ended December 31, 2019, no dividend was received by PFC from REC. However, recently, this month the REC announced a dividend of 110 per cent which works out to be Rs 1,143 crore for PFC. Of this, on proportionate basis dividend for 9 months is around Rs 860 crore. But the entire dividend will be accounted on receipt in fourth quarter of FY20."

Considering all these aspects, the company said that the profit of the company on comparable basis is higher by Rs 1,179 crore (in the nine month period). During October-December, total income rose to Rs 15,878.04 crore from Rs 14,050.95 crore a year ago.

The company's consolidated net profit in financial year 2018-19 stood at Rs 12,640.27 crore. PFC's board also approved an interim dividend of Rs 9.50 per equity share for 2019-20.

It has fixed March 2, 2020 as the 'record date' for ascertaining eligibility of shareholders for payment of interim dividend. The board has fixed the company's borrowing limit at Rs 90,000 crore for 2020-21, which includes Rs 55,000 long term borrowing like term loans, bonds.

Besides, the company can also raise Rs 15,000 crore through long term foreign currency bonds, Rs 5,000 crore via short term borrowings and Rs 15,000 crore via commercial papers. The company has revised the borrowing limit for 2019-20 fiscal year to Rs 1 lakh crore. Last year in March, the company had set a borrowing limit of Rs 81,000 crore for the current financial year.