Power Finance Corporation Limited has completed the transfer of its wholly owned subsidiary to Maharashtra State Electricity Transmission Company Limited following a successful bidding process, marking a significant corporate restructuring move in the power transmission sector.

Transaction Details

The transfer involves Saswad Transmission Limited, which was established specifically for the development of a 400/220 kV AIS Substation at Saswad in District Pune, Maharashtra. The subsidiary was originally a wholly owned entity of PFC Consulting Limited, which itself is a wholly owned subsidiary of Power Finance Corporation Limited.

Financial and Regulatory Aspects

Maharashtra State Electricity Transmission Company Limited emerged as the successful bidder in the competitive process. The transaction was completed for a total consideration of ₹3.79 crore as per the Share Purchase Agreement. The subsidiary's contribution to the parent company's turnover, revenue, income, and net worth during the last financial year was described as negligible.

Transaction Classification

Power Finance Corporation Limited has clarified several important aspects of this transaction:

• The transaction does not fall within the purview of related party transactions
• Maharashtra State Electricity Transmission Company Limited does not belong to the promoter or promoter group
• The transaction is not in the nature of a slump sale
• The consideration for sale and transfer of the subsidiary was determined in accordance with guidelines issued by the Ministry of Power, Government of India

Corporate Governance Compliance

The announcement was made in compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations. The disclosure was signed by Manish Kumar Agarwal, Company Secretary and Compliance Officer, and communicated to both the National Stock Exchange of India Limited and BSE Limited.

This strategic divestment reflects Power Finance Corporation's ongoing portfolio optimization efforts in the power transmission infrastructure sector, transferring specialized transmission assets to state-level transmission utilities through transparent competitive processes.

Power Finance Corporation Ltd. and REC Limited have provided comprehensive details about their proposed merger implementation and expected synergies, following the in-principle board approval granted on February 6, 2026. The companies issued a joint regulatory filing on February 12, 2026, outlining the strategic framework for creating India's largest power sector financier.

Budget Announcement and Board Approval

The merger proposal originated from the Finance Minister's announcement on February 1, 2026, under paragraph 43 of the Union Budget 2026-27 speech. The budget outlined the government's vision for NBFCs in achieving Viksit Bharat with clear targets for credit disbursement and technology adoption.

The boards of both PFC and REC accorded in-principle approval for restructuring in the form of a merger during their respective meetings held on February 6, 2026. The merged entity will continue to remain as a "Government Company" under the Companies Act, 2013 and other applicable laws.

Strategic Synergies and Market Position

The merger is designed to create substantial synergies as India moves towards Viksit Bharat 2047 goals. The power sector will require significant capital investment, and the consolidated entity is expected to benefit from improved balance sheet strength, capital efficiencies, and operational synergies.

The combined entity will focus on emerging technologies including Green Hydrogen, CCUS, small modular nuclear reactors, and energy storage solutions. Based on consolidated metrics, the merged entity would be positioned as the largest power sector financier in India.

Implementation Framework

The companies have outlined key aspects of the merger implementation:

Government Entity Status: The merged entity will maintain its status as a Government company, with the Government of India retaining control including rights for appointment and removal of board members.

Professional Execution: Appropriate external agencies will be appointed, including consultants, valuation experts, and legal advisors to ensure structured, timely, and compliant execution subject to regulatory approvals.

Financial Structure and Compliance

Lending Business Compliance: Both entities currently operate well within RBI's credit concentration norms for single and group borrower exposures. Post-merger, these limits will apply to the consolidated Tier I capital, with no breach of borrower exposure norms foreseen.

Borrowing Structure: The current outstanding borrowing mix comprises approximately 18% domestic bank/FI borrowings, 25% foreign currency borrowings, and 57% domestic bond borrowings.

Exposure Limits: Post-merger, a single-entity exposure limit of 20% would apply to the merged entity. The aggregate Tier I capital of the top ten Indian banks is approximately ₹18.00 lakh crore as per annual reports of March 31, 2025, providing adequate headroom for additional borrowings.

Strategic Continuity

PFC had acquired 52.63% equity stake in REC in 2019, making REC a subsidiary of PFC in line with Government of India's approval. The renewed momentum towards consolidation reflects continuity in strategic intent, representing a step towards creating a single, focused institution to address the evolving financing needs of the power sector.

The merger represents the first step in the government's initiative to restructure public sector NBFCs, potentially setting a precedent for similar consolidations in the sector while leveraging synergies to achieve greater operational efficiency in serving India's power and rural electrification financing needs.