Power Finance Corporation is thinking big and with the market conditions improving, the company is chalking out new business plans. The financier plans to set up two firms to look into consortium funding and renewables in April 2010. 

Power Finance Corporation, India's leading state-run financing firm for the power sector is thinking big and with the market conditions improving, the company is chalking out new business plans. The financing company plans to set up two firms to look into consortium funding and renewables in April 2010.

“We have seen that if we have consortium of banks, it is easy to raise funds. Also, we have sanctioned Rs 600 crore this year so far towards renewable power projects. So we decided to float two companies,” said Satnam Singh, CMD, Power Finance Corporation. 

The company is also keen on backward integration and has recently begun financing coal mining and equipment manufacturing funding.  But is the company running too fast in a subdued market?

“The NBFC space in power sector is a nice place to be in as spreads are more stable and the risk related to NPAs don't usually exist,” said Prateek Agarwal, head of equities at Bharti AXA Investment Managers.

Apart from these initiatives, PFC recently floated a new financial product known as 'loan towards promoter's equity’. This will be offered to state power generation companies depending on their financial credibility. Its first customer is Andhra Pradesh Generation that was sanctioned a loan of Rs 100 crore.

While the government has accepted that the country will fail to achieve its power generation target, sector lender Power Finance Corporation is hopeful of meeting some demand supply gap with backward integration and two new companies. PFC expects to tap more opportunities in the power sector.