Representative image of electric pylons.
Credit: Reuters Photo
Mumbai: The Maharashtra State Electricity Distribution Company Limited (Mahavitaran), the country's largest electricity distribution company, has recently repaid a loan of Rs 12,800 crore from State Bank of India in a single instalment before the due date.
Chairman and Managing Director Lokesh Chandra informed that the loan was repaid by raising a low-interest loan from another financial institution and from company’s own funds, thus saving interest amount substantially.
Chief Minister Devendra Fadnavis has instructed Mahavitaran to make Mahavitaran financially stronger and in this regard, successful steps have been taken to lighten the debt burden on the company.
Mahavitaran had taken a total loan of Rs 12,800 crore from State Bank at various stages. For this, it had to pay interest at a rate of 8.65 percent to 9.25 percent. Instead, Mahavitaran paid off the State Bank's Rs 7,100 crore loan by raising a loan of Rs 7,100 crore from another financial institution at a low interest rate of 8.25 percent. Apart from that, Mahavitaran paid off a State Bank loan of Rs 5,634 crore from its own funds.
While taking the State Bank loan, Mahavitaran had kept its revenue from ten circles as collateral. These circles have an annual revenue of Rs 30,000 crore. After paying off all the State Bank loans, this revenue will be free from collateral. On that basis, the company will be able to raise funds of up to Rs 50,000 crore in the form of loans at a moderate interest rate.
Mahavitaran's prepayment of a State Bank loan of Rs 12,800 crore in a single instalment has increased the company's creditworthiness in the financial market. This development will increase the confidence of investors. If the company wants to raise private or public bonds in the future, it will be useful to have repaid such a large loan for that too. This repayment of the loan is also important in terms of listing Mahavitaran in the stock market in the future.