Industry Profile: There are many measures of Development. Per capita income, GDP, unemployment rate even infant mortality also. Out of it is the use and availability of energy. This is directly or indirectly touching many aspects of growth. Power is essential for infrastructure. For infrastructure development, you need Metal, Mining, Power, and Human resources. It generates Employment. Facilitate many development opportunities. Large factory manufacturing cement also needs power. The carmaker also requires it. Hospitals need it, and so do Farmers. For financing, such thing is vital for Development. As there is a considerable risk involved in it, like time is taken for return-generating, the possibility of insolvency of the borrower, many times, Private players hesitate to lend or ask for a heavy return. That makes it govt dominating sector. Given the various constraints on the government, primarily the financial ones, private participation in the power sector is likely to increase sharply. Most of the time, utilities like power are coming under Private companies, so building new power generation facilities is managed by those companies.

NBFC or nonbanking Finance Company plays a pivotal role in an economy like India. As per definition, they are companies providing certain banking services. As per RBI Definition

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.

In India, they are regulated under RBI within the framework of the [[Reserve Bank of India Act, 1934]] (Chapter III-B) and the directions issued by it. As a result, there are significant restrictions on NBFC about Collecting deposits and doing business. There are eight consequential types of NBFCs in India.

  1. Asset finance company. The company does business in financing physical assets supporting productive or economic work. In the simple word, they are companies sponsoring tractors, Vehicle for agriculture lathe machines, cranes, generator sets, earthmoving and material handling equipment, moving on own power, and general-purpose industrial machines.
  2. Investment company: The company like mutual Fund, Holding companies in some cases, or Private Equity Companies.
  3. Loan Company: The company has the business of giving loans but other than being an Asset finance company. Like Personal loans, Housing Finance companies.
  4. Infrastructure Finance Companies: Companies Financing Infrastructure. Again, RBI kept Strict regulations on them. Infrastructure finance companies deploy a minimum of three-fourths of their assets in infrastructure loans. The net owned funds are more than 300 crores, have a minimum crediting rating of ‘A,’ and the Capital to Risk-Weighted Assets Ratio is 15%. The best example is IDFC. Though now they are owned by one bank, they are one Infrastructure finance company. Another is India Infrastructure Finance Company Limited ( IIFCL), Infrastructure Finance Corporation of India (IFCI), and Power Finance Corporation (PFC ).
  5. Infrastructure Debt Fund Non-Banking Finance Company aka IDF – NBFC: If you are unaware of it, yes, they exist. India Infra Fund is the best example managed by IDFC. IDF-NBFC is a company registered as NBFC to facilitate the flow of long-term debt into infrastructure projects. IDF-NBFC raises resources through Multiple-Currency bonds of minimum 5-year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
  6. NBFC FACTORS: One another significant type of NBFC in India. Factoring is a type of working capital financing. SBI Factor and Canara factor are some examples.
  7. Gold Loan NBFC: You can’t ignore this type in India. Over the years, gold loan NBFCs witnessed an upsurge in the Indian financial market, owing mainly to the recent period of appreciation in the gold price and consequent increase in the demand for a gold loans by all sections of society, especially the poor and middle-class to make ends meet. Though many NBFCs are offering gold loans in India, about 95 percent of the gold loan business is handled by three Kerala-based companies, Muthoot Finance, Manapuram Finance, and Muthoot Fincorp. The growth of gold loan NBFCs eventuating from various factors, including Asset Under Management (AUM), number of branches, customers, etc.
  8. Residuary Non-Banking Finance Company: All famous for Sahara case as it is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being an Investment, Asset Financing, Loan Company. So you can do so many businesses. Nowadays, there are not many of them, and they may be restricted from existing. They were the main accused in many Frauds.

Company Profile: Based in New Delhi, the company was incorporated in 1986 and is navaratna CPSE. PFC is under the administrative control of the Ministry of Power. The RBI classified the company as an Infrastructure Finance Company on 28th July 2010. PFC has provided financial assistance to power projects across India, including generation, transmission, distribution, and RM&U projects. Recently, it has forayed into financing other infrastructure projects with backward linkages to the power sector like coal mine development, fuel transportation, oil & gas pipelines, etc.

The company has Financial and Non Financial policies for the power sector. Financial policies give Rupee term loans, Foreign currency term loans, and short-term loans. The company also has Non-financial policies like Financial Consulting, Financial Products, Investment Banking, Loan Management, and Linkage Management. The customers or clients of the company include State Electricity Boards, State sector power utilities, Central sector power utilities, and Private sector companies.

Shareholding Pattern: BSE Shareholding Filings

Financials and Ratios  :  [table id=93 /]

Future Prospects: Recently, the Power sector was going through a painful time, visible from the Ratio: reduced Efficiency, Lowered Dividend, and Low EPS. As the government is concentrating on infrastructure and India is also planning to push Electric vehicles, the Strong Power sector is one crucial element. In that way, PFC is one important stock that keeps a good dividend yield.