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Feb 11, 2013, 02.45 PM IST | Source: Business Line

IRFC raises Rs 5,350 cr through tax-free bond issue

Indian Railway Finance Corporation (IRFC), the fund mobilising arm of the Railways, has raised close to Rs 5,350 crore through its tax-free bond issue, which closed on Friday. The issue size was Rs 1,000 crore, with a green-shoe option to retain up to Rs 8.886 crore.

Indian Railway Finance Corporation (IRFC), the fund mobilising arm of the Railways, has raised close to Rs 5,350 crore through its tax-free bond issue, which closed on Friday. The issue size was Rs 1,000 crore, with a green-shoe option to retain up to Rs 8.886 crore.

As against an offer of one crore tax-free bonds (in the nature of secured redeemable non-convertible debentures), it received bids for 5.38 crore bonds. While 2.82 crore bids came in for series 1 (carries 7.38 per cent interest with 10-year tenor), another 2.56 crore bids for series 2 (7.43 per cent interest with 15-year tenor).

The bonds are proposed to be listed on the BSE and the NSE

With this, the company has mobilised close to Rs 6,500 crore this fiscal, as it had already raised Rs 1,100 crore through a private placement.

In the last two days of the issue, it raised about Rs 2,500 crore. IRFC had also raised Rs 1,650 crore through external commercial borrowings for a five-year tenure, at 3.417 per cent.

Falling short

IRFC has a budgeted target of raising Rs 15,000 crore fund in current fiscal.

It will have to mobilise about Rs 6,800 crore, unless the Indian Railways lowers the borrowing target for the firm. Of this, IRFC still has a tax-free window of about Rs 3,500 crore, for which it can enter the market again. “We will use options like term loans and external commercial borrowing window to raise the requisite amount. That will not be difficult,” said Rajiv Datt, Managing Director.

IRFC funds are primarily used to buy rolling stock, such as locomotives, wagons and coaches.

Till date, it has acquired 6,073 locomotives, 36,613 passenger coaches and 162,238 freight wagons for the Railways, which are valued at Rs 82,447 crore.

This ensures that the loans are securitised against rolling stock, allowing IRFC to raise funds at a lower cost.

In fiscal 2011-12, the company funded the acquisition of 506 locomotives, 2,757 passenger coaches and 13,208 freight wagons, valued at Rs 12,604 crore. This was the highest ever funding of rolling stock by IRFC.

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