IRFC to raise up to Rs 6,000 cr within 2 weeks

Indian Railways Finance Corporation (IRFC), the fund raising arm of the Indian Railways, will mobilise Rs 5,500 crore — Rs 6,000 crore, in the remaining two weeks of the current fiscal from the domestic market.

Funds raised by IRFC are used to pay for buying locomotives, wagons and coaches for Indian Railways.

“From the total fund mobilising target for the current fiscal of about Rs 15,000 crore, we have to raise about Rs 5,500-6000 crore. We will do that before the current fiscal ends and make available to Indian Railways,” Rajiv Datt, Managing Director, IRFC, told Business Line.


IRFC raised about Rs 7,000 crore through its tax-free bond issues in the current fiscal, which is Rs 3,000 crore short of the Rs 10,000-crore permitted to IRFC through tax-free bonds for the fiscal.

This was because all organisations with permissions for tax-free bond issues hit the market after December 2012, in effect reducing the time window when firms could raise money. As a result, many firms have not been able to mobilise money from the market.

Last week, nine firms, including India Infrastructure Finance Corporation Ltd, IRFC, Dredging Corporation, Ennore Port and JN Port were vying to raise money through tax free bonds. NHAI did not even hit the market to raise funds as it had not spent the money raised in previous fiscal.

Railways plan

Meanwhile, Indian Railways plans to approach the Finance Ministry to raise at least Rs 10,000 crore through tax-free bonds in the next financial year.

“We have not firmed up the exact amount that we will seek from the Finance Ministry. But, at the minimum, we would like to ask the Ministry to maintain the Rs 10,000-crore limit,” said Railways’ Financial Commissioner Vijaya Kanth.

In fiscal 2012, IRFC had mobilised the entire Rs 10,000 crore through tax-free bonds.

This fiscal, among all issuers, IRFC may end up raising the maximum amount through tax-free bonds.

Railways to invest Rs 5 lakh cr during 12th five year plan

The railways plan to invest Rs 5 lakh crore in capacity addition during the 12 Five-Year Plan (2012-17), according to a senior official of the Indian Railway Finance Corp, the financing arm of the state-run enterprise.

About a fifth of this corpus, which is a substantial jump from the 11th Plan’s expenditure target of 1.09 lakh crore, will be raised by IRFC through market borrowings while the rest will come through budgetary support, internal revenues and the public-private partnerships, the official said.

IRFC’s market borrowing plan includes issuance of tax-free bonds worth about 10,000 crore by end of January, the official added.

“To financially boost its infrastructure development plans, the railways will have to raise money from the market, given the internal resources add a meager percent to its revenues,” the official said. Cash-strapped Indian Railways, which manages the world’s third largest rail network, is keen on attracting private investment as it does not generate enough funds to finance its development plans.

Revenue shortfall has already forced it to cut plan outlay for the current fiscal to Rs 55,881 crore from the Rs 60,100 crore targeted earlier.

“For capacity addition, railways can’t depend solely on internal resources or market borrowings, it’ll have to invite private partners,” a railway official said.

To facilitate this, the Cabinet Committee on Infrastructure recently approved a policy on participative models for rail connectivity and capacity augmentation, in line with the railways’ internal policy document.

“The ministry of railways wishes to attract private capital for accelerated construction of fixed rail infrastructure. For this, it has formulated participative investment models for its existing shelf of projects and also for new ones,” the policy document said.

The modes suggested to route private investment in fixed rail infrastructure are non-government railway model, joint ventures, execution of projects through the build, operate, transfer mode, capacity augmentation, and state government projects.

“This kind of policy is welcome but a confidence building measure is required. Given the unsuccessful past experience with private partners, the private confidence in railways is not high,” said Vinayak Chatterjee, chairman of Feedback Infra.

Indian Railways transports 2.65 million tonne of freight and 23 million passengers every day.

Published in: on December 29, 2012 at 8:06 am  Leave a Comment  
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