RailEnquiry

Indian Railway Finance Corporation (IRFC), the funding arm of the Railway Ministry, on Thursday said it might raise INR 1,500 crore more towards the end of this fiscal to meet the budgetary borrowing target of INR 15,000 crore.

IRFC’s tax-free bond issue to rise over INR 8,886.40 crore opens for subscription on January 21, and closes on January 29. Of the approved INR 10,000-crore fund raising through the bond issue, the corporation has already raised INR 1,113.60 crore through private placement of bonds.

The funds raised would be utilized to finance the acquisition of rolling stocks like coaches, locomotives, engines, etc. which would be leased to ministry of railways, an IRFC official said.

“We raised INR 1,650 crore through External Commercial Borrowing (ECB) route in October and INR 10,000 crore is targeted from tax-free bond issue, of which INR 1,113 crore was raised through private placement, taking total fund raising to over INR 11,650 crore till now,” IRFC Director Finance Mr. D C Arya said.

“Another INR 1,500 crore could be raised either through the ECB route or taxable bonds, to meet budgetary borrowing target of INR 15,000 crore for this fiscal,” he said adding that part of the fund requirements would be met through internal accruals.

“IRFC’s estimated contribution of INR 14,896 crore vis-a-vis total budgeted funding requirement of the Indian Railway of INR 60,100 crore for 2012-13, is around 24.78%,” Mr. Arya said adding INR 1,040 is to fund activities of Rail Vikas Nigam Limited.

According to IRFC estimates, freight earnings of the railways in 2013 are expected to be around INR 89,339 crore, up from over INR 62,800 crore in 2011, while railways passenger earnings are expected to touch INR 36,073 crore in 2013 against INR 28,800 crore in 2012.

IRFC average cost of borrowing stood at 7.62% in the last financial year (FY), a company official said.

IRFC tax-free bond issue is likely to be the last such issue as the government is likely to discontinue with such type of bonds as it gears up to roll out Direct Tax Code (DTC), replacing the Income Tax Act, company sources said.