Nature of the Event

Key Quantitative Figures

PFC Financials (FY 2025-26):

  • Standalone Net Worth: ₹1,02,532 crore
  • Consolidated Net Worth: ₹1,73,441 crore
  • Standalone Turnover: ₹58,504 crore
  • Consolidated Turnover: ₹1,15,444 crore

REC Financials (FY 2025-26):

  • Standalone Net Worth: ₹84,290 crore
  • Consolidated Net Worth: ₹85,054 crore
  • Standalone Turnover: ₹59,140 crore
  • Consolidated Turnover: ₹59,584 crore

Merger Impact: The merged entity would have an aggregate loan book of over ₹11 lakh crore.

Dates of Action

The Board meeting was held on June 28, 2026, commencing at 8:30 PM and concluding at 9:10 PM. The scheme was approved on this date.

Parties Involved

Transferee Company: Power Finance Corporation Limited (PFC)

Transferor Company: REC Limited (REC)

Regulators/Exchanges: BSE Limited, National Stock Exchange of India Limited (NSE), SEBI

Advisors:

  • Transaction and Tax Advisor: Deloitte Touche Tohmatsu India LLP
  • Legal Advisor: Cyril Amarchand Mangaldas
  • Independent Valuers: RBSA Valuation Advisors LLP (appointed by PFC) and Ernst & Young Merchant Banking Services LLP (appointed by REC)
  • Fairness Opinion Providers: SBI Capital Markets Ltd (for PFC) and Nuvama Wealth Management (for REC)

Purpose and Rationale

The stated rationale for the merger includes:

  • Creating the principal financing institution for implementing power sector reforms and flagship government programmes
  • Supporting India's goal of Viksit Bharat 2047 through substantial capital investment in the power sector
  • Serving as a key financier for India's energy transition and strategic infrastructure buildout
  • Strengthening market confidence through enhanced scale, diversified exposure, and deeper sector expertise
  • Improving balance sheet strength, borrowing capacity, and financial flexibility
  • Becoming the primary vehicle for implementing government schemes for the power sector

Merger Terms and Share Exchange Ratio

The scheme provides for:

  • Merger by absorption of REC into PFC with effect from the Appointed Date (to be defined)
  • Dissolution of REC without winding up
  • Issuance of Consideration Shares to Eligible Shareholders of REC as on the Record Date (to be determined)
  • Share exchange ratio: 88 equity shares of PFC (₹10 each fully paid up) for every 100 equity shares of REC (₹10 each fully paid up)
  • No cash consideration involved

Ownership Structure

PFC currently holds 52.63% of the share capital of REC on a fully diluted basis. The merger is not considered a related party transaction under Regulation 23(5)(a) of Listing Regulations for transactions between public sector companies, and does not attract requirements of Section 188 of Companies Act, 2013 per MCA General Circular No. 30/2014.

Conditions and Approvals Required

The scheme is subject to:

  • Receipt of all requisite approvals and consents under applicable law
  • Approvals from respective shareholders and creditors of both companies
  • Approvals from all relevant regulatory and governmental authorities
  • The merged entity continuing to qualify as a 'Government Company' under Companies Act, 2013
  • Government of India continuing to retain majority voting rights and control in the merged entity (directly or indirectly)
  • Obtaining 'No Objection Letter' from BSE and NSE under Regulation 37 and 59A of Listing Regulations

Next Steps

The approved scheme will be filed with BSE and NSE for obtaining their 'No Objection Letter'. The copy of the scheme will be available on the company's website at www.pfcindia.co.in after submitting it to the stock exchanges.

Business Profiles

PFC: Schedule-A Maharatna CPSE under Ministry of Power, India's largest government-owned NBFC, nodal agency for Revamped Distribution Sector Scheme (RDSS), Ultra Mega Power Projects (UMPPs), and Integrated Power Development Scheme (IPDS).

REC: Schedule-A Maharatna CPSE under Ministry of Power, leading NBFC engaged in power sector financing, nodal agency for Revamped Distribution Sector Scheme and national program implementation agency for PM Surya Ghar Muft Bijli Yojana.

#Tags: #PowerFinanceCorporation #RECLimited #Merger #SEBIDisclosure #RegulatoryCompliance #FinancialUpdate #Neutral