About
Indian Railway Finance Corporation Ltd
Indian Railway Finance Corporation Limited was incorporated on December 12, 1986, as a Public Limited Company. Thereafter, The Company received a Certificate of Commencement of Business from the RoC on December 23, 1986. The MCA, through its notification dated October 8, 1993, classified the Company as a Public Financial Institution and subsequently, Company was registered with RBI to carry on the business of a non-banking financial institution, pursuant to a certificate of registration dated February 16, 1998. Dated March 17, 2008, RBI classified Company as a non-deposit accepting asset finance non-banking financial company. Thereafter, Company got reclassified as an NBFC-ND-IFC by RBI, through a fresh Certificate of Registration dated November 22, 2010.
Indian Railway Finance Corporation (IRFC) is a Schedule A' Public Sector Enterprise under the administrative control of the Ministry of Railways (MoR), Govt. of India. Since inception in 1986, IRFC has been mobilising funds from domestic and international markets for Indian Railways. The Company has made a huge contribution in the development and growth of Indian Railways and Railway entities including Rail Vikas Nigam Limited (RVNL) and IRCON. The President of India along with his nominees holds 100% of the equity share capital.
The Company's principal business is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways as finance lease. It is a dedicated market borrowing arm of the Indian Railways. Its primary business is financing the acquisition of rolling stock assets, which includes both powered and unpowered vehicles, for example locomotives, coaches, wagons, trucks, flats, electric multiple units, containers, cranes, trollies of all kinds and other items of rolling stock components as enumerated in the Standard Lease Agreement, leasing of railway infrastructure assets and national projects of the Government of India and lending to other entities under the Ministry of Railways, Government of India (MoR).
The MoR is responsible for the procurement of Rolling Stock Assets and for the improvement, expansion and maintenance of Project Assets. The Company is responsible for raising the finance necessary for such activities. Over the last three decades, the company has played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of its annual plan outlay. The Union Budget proposed a capital expenditure of Rs. 1,602 billion for the Indian Railways for Fiscal 2020, which was higher than the capital expenditure (revised estimate) of Rs. 1,388.58 billion in Fiscal 2019. The actual capital expenditure of the Indian Railways was Rs. 1,334 billion in Fiscal 2019. In Fiscal 2019, the company financed Rs. 525.35 billion accounting for 39.38% of the actual capital expenditure of the Indian Railways.
The Company follows a financial leasing model for financing the Rolling Stock Assets. The period of lease with respect to Rolling Stock Assets is typically 30 years comprising a primary period of 15 years followed by a secondary period of 15 years, unless otherwise revised by mutual consent. In terms of the leasing arrangements, the principal amount pertaining to the leased assets is effectively payable during the primary 15 years lease period, along with the weighted average cost of borrowing and a margin determined by the MOR in consultation with the company at the end of each Fiscal. Typically, the weighted average cost of borrowing factors in any expenses incurred by the company with respect to any foreign currency hedging costs and/ or losses (and gains, if any) as well as any hedging costs for interest rate fluctuations. For the second 15 year period, the company charges the Indian Railways a nominal rate which is subject to revision on mutually acceptable terms. The Company also follows a leasing model for Project Assets, which typically provides for lease periods of 30 years.
The total Capital Outlay (Capital Expenditure) of MoR for the year 2020-21 was Rs. 1,55,161 crore out of which IRFC's disbursement against the same was significant at Rs. 1,04,369.00 crore which constitutes 67.43% of total capital outlay for the year 2020-21. In development of additional terminals for handling rail cargos, a new 'Gati Shakti Multi-Modal Cargo Terminal (GCT)' policy was launched on 15 December, 2021.
As on 31st March 2023, 86.36% of the paid-up equity share capital of the Company comprising of 11,28,64,37,000 Equity Shares of Rs. 10/- each were held by President of India acting through administrative ministry i.e., Ministry of Railways (MoR). The balance 13.64% of paid-up equity share capital was held by public.
Indian Railway Finance Corporation Ltd
Chairman Speech
Dear Shareholders,
Financial Year 2022-23 has been another turbulent year with the global
economy marred by unprecedented uncertainty. The global economic growth has moderated
amidst the prolonged Russia- Ukraine war, even though the effect of the pandemic has
receded. Food and energy price shocks affected the general prices, with wage price spiral
leading to elevated inflation across countries. The recent failures of few banks in the
United States are a reminder of the challenges posed by the interaction between tighter
monetary and financial conditions and the buildup in vulnerabilities. Even though the
financial sector remained under tremendous stress due to pandemic situation and volatility
in the market arising from global macro issues Indian economy was stable, and the Company
continued to exhibit excellent performance which was primarily attributed to its strategic
relationship with MOR, strong financials and its dedicated workforce.
Economic Overview
Despite concerns about an impending global recession, India's economy
has reaffirmed its position as one of the world's fastest growing major economies. Amid
several headwinds such as high inflation, escalating commodity prices and disruptions in
global trade due to ongoing geopolitical conflicts in Europe, the economy is projected to
have clocked a growth rate of 7.2% during FY23. The Government and the Reserve Bank of
India (RBI) have implemented several measures to address these headwinds and recent
decline in commodity prices suggest that these efforts have started to bear fruit in terms
of reining in inflation.
India has emerged as the third-largest economy in terms of purchasing
power parity.
In the Union Budget for FY24, the Government announced capex worth ? 10
lakh crores, which marked a substantial increase of 37.40% compared to the previous year.
This underscores the Government's focus on ramping up infrastructure development,
which acts as a tailwind to drive long-term economic growth. The Indian Railways received
the highest ever capital outlay of ? 2.40 lakh crores, which is further expected to
bolster India's regional connectivity.
Well-capitalised public sector banks in India have improved their
financial health, which has put them in a better position to boost credit supply. Despite
a slowdown in global economic activity, India's performance indicators do not reflect this
trend, resulting in a sense of cautious optimism.
Indian Railways Sector
Indian Railways (IR) with its 4th largest network in the world, has
been the backbone of the transportation sector in India, carrying millions of passengers
and cargo from one part of the country to the other. Indian Railways has definitely
consolidated the roots of growth in the post pandemic scenario and now the path has been
set for moving ahead with positive momentum. IR is moving forward with a vision to become
a more efficient system, to be able to keep pace with the growth and compliment the
economic development of the nation.
Indian Railways with its more than 170 years of existence, is now
making transformative changes. The vision of Indian Railways is to provide safe,
efficient, affordable, customer focused and environmentally sustainable integrated
transportation solution(s) to the country.
Indian Railways achieved its highest ever freight loading of 1512.07 MT
in 2022- 23 as compared to 1418.1 MT in 2021- 22. There is a 6.63% increase in freight
loading over FY 2021-22. Freight loading is the dominant source of revenue for IR and
incremental loading has been continuously achieved in recent years. The freight earnings
have increased by 16% compared to the same period in the previous year.
Indian Railways are now poised to take transformational leap in the
Amrit Kaal of the post-Independence period and fulfill the vision of 'Viksit Bharat' which
includes Modern, faster, available on demand passenger services and facilities, a
substantial share in freight cargo with ancillary services in logistics parks and domestic
industry driven rail infrastructure of highest standards. A record capex target of RS.
2.60 lakh crores in 2023-24 is targeted to initiate the necessary changes for this vision,
across the entire network. Achieving India's commitment of net zero carbon by 2070 will
rest in part on more rail-bound passenger and cargo movement.
The Indian Railways has set ambitious targets to contribute
approximately 1.5% to the country's GDP by developing infrastructure that can support 45%
of the modal freight share of the economy.
Operational Highlights
We have consistently exhibited robust financial performance on the back
of raising funds at competitive rates. This has helped us keep our cost of borrowings low.
Strategic relationship with the Ministry of Railways enables us to maintain a low risk
profile. The FY2022-23 has been another year of strong financials. Revenue from operations
of Company has increased by RS. 3,593 crores from RS. 20,298.27 crores in 2021-22 to RS.
23,891.27 crores in 2022-23, showing a growth of 17.70%. Profit before Tax (PBT) of
Company for the year ended 31st March 2023 was RS. 6,337.01 crores as compared to RS.
6,090.15 crores for the previous year, registering a growth of 4.05%.
Total disbursement for FY 2022-23 was RS. 32,392.63 Crores comprising
of RS. 17,000 Crores for funding of Rolling Stock, H15,392.63 Crores for financing of
Railway Projects under EBR- IF.
Borrowings during the year include Taxable Bonds worth RS. 21,558.70
crores (Previous year 19,847.90 crores), Rupee Term Loans of RS. 22,274.46 crores
(previous year RS. 42,900 Crores) and 54EC bonds of RS. 1,729.61 crores (previous year RS.
1,161.01 crores).
Company had received approval of Ministry of Finance for issue of 54EC
Capital Gain Bonds in October 2017, since then, Company is making all endeavors to
increase its market share in 54EC Bond market. In 2022-23, Company mobilized around RS.
1,729.61 crores througRs. 54EC Bond as against RS. 1,161.01 crores in 2021-22, registering
a growth of 48.97%.
The weighted average cost of the pool of borrowings made by Company
during the year 2022-23 for rolling stock worked out to 7.51 % p.a (semi-annual) as
against 6.62% (semi-Annual) during the previous year 2021-22 and WACC for project assets
under EBR-IF worked out to 7.52% for FY 2022-23 as against 6.43% (semiAnnual) during the
previous year 202122. During the year under review RBI has hiked Repo rate from 4% to
6.50%.
Company has not made any provision for tax in its books pursuant to its
decision to exercise the option of lower tax rate permitted u/s 115BAA of the Income Tax
Act, 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 dated 20th
September, 2019. The Company's taxable income was nil and it did not have to pay Minimum
Alternate Tax (MAT) with reference to its Book Profit. MAT payable u/s 115 JB was outside
the ambit of the Section 115 BAA. Thus, on adoption of Section 115 BAA of the Income Tax
Act, 1961, the Company was outside the scope and applicability of MAT provisions and there
was a zero-tax liability in the financial year 2022-23.
During the FY 2022-23, Company had declared the Interim Dividend @ 8%
i.e., RS. 0. 80/- per equity share having face value of RS. 10/- each and has also
recommended a Final Dividend for the FY 2022-23 @ 7%
1. e., RS. 0.70/- per equity share, which is subject to approval of the
shareholders at the ensuing Annual General Meeting. Thus, the total dividend for the
financial year 2022-23 would amount to RS. 1.50/- per equity share of RS. 10/- each.
Corporate Governance
Company considers good corporate governance practices a sine qua non
for sustainable business that aims at generating long term value for its shareholders and
all other stakeholders. Accordingly, it has been laying increasing emphasis upon
development of best corporate governance practices amongst Central Public Sector
Enterprises (CPSEs). Pursuant to the DPE Guidelines on Corporate Governance, quarterly
compliance report is being submitted to the Ministry of Railways, through DPE, within the
stipulated time. Further, the Report containing Annual Score (consolidated score of four
quarters) was also submitted to DPE within the prescribed timeline.
Corporate Social Responsibility
During the financial year 2022-23, the Company in accordance with the
provisions of section 135 of the Companies Act, 2013 & rules made thereunder was
required to spend RS. 91.31 crores, being 2% of its average net profits for the last three
financial years. The Company has approved a total of 16 projects with a total outlay of
RS. 59.00 crores and out of the remaining balance RS. 30.31 crores was disbursed to PM
CARES Fund, RS. 1.00 crore to Swachh Bharat Kosh and RS. 1.00 crore to Clean Ganga Fund.
Whereas the amount allocated towards 16 projects amounting to RS. 59.00 crores would be
disbursed on receipt of bills/claims from the implementing agencies in future and the same
amount has been transferred to the ‘CSR Unspent Account' maintained with Scheduled
Bank in terms of section 135(6) of the Companies Act, 2013. The Company is committed to
promoting Health and Nutrition as the theme for focused intervention as mandated by
Department of Public Enterprises for the Financial Year 2023-24.
Road Ahead
Board has authorized the Company to borrow funds amounting to RS.
50,000 Crores during FY 2023-24 for meeting the funding requirement of Indian Railways, if
any, new business activities, refinancing of existing loans and for other general
corporate purposes. For the FY 202324, the Company is looking forward for diversification
of lending portfolio and fund projects with forward or backward linkage (s) with Railways.
With India's transforming railway landscape and evolving
infrastructure,
I consider ourselves to be fortunate that Company is well positioned to
seize the emerging opportunities. Further, I am confident that Company will be able to
achieve strategic goals while delivering sustained and compelling results in the future.
I express my gratitude to customers, shareholders, suppliers,
employees, lending institutions, stakeholders and the Government of India for reposing
their confidence and trust in the Company. The Company looks forward to their continued
support for sustaining its excellent performance levels.
Regards,
Sd/-
(Shelly Verma)
Chairman and Managing Director
(Addl. Charge) & Director (Finance)
DIN:07935630
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Indian Railway Finance Corporation Ltd
Company History
Indian Railway Finance Corporation Limited was incorporated on December 12, 1986, as a Public Limited Company. Thereafter, The Company received a Certificate of Commencement of Business from the RoC on December 23, 1986. The MCA, through its notification dated October 8, 1993, classified the Company as a Public Financial Institution and subsequently, Company was registered with RBI to carry on the business of a non-banking financial institution, pursuant to a certificate of registration dated February 16, 1998. Dated March 17, 2008, RBI classified Company as a non-deposit accepting asset finance non-banking financial company. Thereafter, Company got reclassified as an NBFC-ND-IFC by RBI, through a fresh Certificate of Registration dated November 22, 2010.
Indian Railway Finance Corporation (IRFC) is a Schedule A' Public Sector Enterprise under the administrative control of the Ministry of Railways (MoR), Govt. of India. Since inception in 1986, IRFC has been mobilising funds from domestic and international markets for Indian Railways. The Company has made a huge contribution in the development and growth of Indian Railways and Railway entities including Rail Vikas Nigam Limited (RVNL) and IRCON. The President of India along with his nominees holds 100% of the equity share capital.
The Company's principal business is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways as finance lease. It is a dedicated market borrowing arm of the Indian Railways. Its primary business is financing the acquisition of rolling stock assets, which includes both powered and unpowered vehicles, for example locomotives, coaches, wagons, trucks, flats, electric multiple units, containers, cranes, trollies of all kinds and other items of rolling stock components as enumerated in the Standard Lease Agreement, leasing of railway infrastructure assets and national projects of the Government of India and lending to other entities under the Ministry of Railways, Government of India (MoR).
The MoR is responsible for the procurement of Rolling Stock Assets and for the improvement, expansion and maintenance of Project Assets. The Company is responsible for raising the finance necessary for such activities. Over the last three decades, the company has played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of its annual plan outlay. The Union Budget proposed a capital expenditure of Rs. 1,602 billion for the Indian Railways for Fiscal 2020, which was higher than the capital expenditure (revised estimate) of Rs. 1,388.58 billion in Fiscal 2019. The actual capital expenditure of the Indian Railways was Rs. 1,334 billion in Fiscal 2019. In Fiscal 2019, the company financed Rs. 525.35 billion accounting for 39.38% of the actual capital expenditure of the Indian Railways.
The Company follows a financial leasing model for financing the Rolling Stock Assets. The period of lease with respect to Rolling Stock Assets is typically 30 years comprising a primary period of 15 years followed by a secondary period of 15 years, unless otherwise revised by mutual consent. In terms of the leasing arrangements, the principal amount pertaining to the leased assets is effectively payable during the primary 15 years lease period, along with the weighted average cost of borrowing and a margin determined by the MOR in consultation with the company at the end of each Fiscal. Typically, the weighted average cost of borrowing factors in any expenses incurred by the company with respect to any foreign currency hedging costs and/ or losses (and gains, if any) as well as any hedging costs for interest rate fluctuations. For the second 15 year period, the company charges the Indian Railways a nominal rate which is subject to revision on mutually acceptable terms. The Company also follows a leasing model for Project Assets, which typically provides for lease periods of 30 years.
The total Capital Outlay (Capital Expenditure) of MoR for the year 2020-21 was Rs. 1,55,161 crore out of which IRFC's disbursement against the same was significant at Rs. 1,04,369.00 crore which constitutes 67.43% of total capital outlay for the year 2020-21. In development of additional terminals for handling rail cargos, a new 'Gati Shakti Multi-Modal Cargo Terminal (GCT)' policy was launched on 15 December, 2021.
As on 31st March 2023, 86.36% of the paid-up equity share capital of the Company comprising of 11,28,64,37,000 Equity Shares of Rs. 10/- each were held by President of India acting through administrative ministry i.e., Ministry of Railways (MoR). The balance 13.64% of paid-up equity share capital was held by public.