IRFC COVER-final - Indian Railway Finance Corporation Ltd.

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Directors' ReportDear Shareholders,On behalf of the Board of Directors of your Company, I am pleased to present their 23 rd Annual Report covering salient featuresof the business and operations of your Company together with the audited accounts, Auditor's Report and Report of the Comptroller& Auditor General of India on Supplementary audit carried out by them for the financial year ended 31 st March, 2010.Financial HighlightsSummarised below is the position of key financial results of your Company for the year ended 31 st March, 2010:(R in Crore)Income1. Lease Income/ Lease Rental2. Income on Loans & Deposits3. Income on Investments4. Exchange Rate Variation Gain5. Other IncomeTOTALExpenditure6. Interest & Lease Rent7. Depreciation8. Admn. & Other expenditure9. Amortisation of foreign currency monetary item Translation Diff. A/cTOTAL10. Profit for the year before Tax11. Prior period Income (Net)12. Profit Before Tax (PBT)13. Provision for Taxo Current Tax (MAT)o Deferred Taxo Fringe Benefit Tax14. Profit After Tax (PAT)Appropriations15. Dividend & Dividend Tax16. Transfer to General Reserve17. Transfer to Exchange Variation Reserve18. Balance appropriated to Bonds Redemption ReserveTOTAL2009-103073.76359.860.0811.1639.083483.942560.970.3599.6634.552695.53788.41(0.12)788.29135.13210.47--345.60442.69117.0045.00-280.69442.692008-092726.45286.890.071.969.413024.782348.830.3717.85NIL2367.05657.73(0.04)657.6974.98401.850.07476.90180.79117.0019.0019.4725.32180.7910
Happily, your Company posted Profit Before Tax (PBT) ofR 788.29 crore during 2009-10 as compared to R 657.69crore for the previous year, a healthy growth of 19.6%.Likewise, shorn of the need for additional provisioning forDTL for previous periods as had become necessary in theaccounts of 2008-09, the Company has successfully absorbedthe impact of higher rate of Minimum Alternate Tax to posta net profit of R 442.69 crore as against R180.79 crore in theprevious year.DividendYour Company seeks to strike a judicious balance betweenthe need for providing an appropriate return to theshareholders and retaining a reasonable portion of the profitto maintain a healthy financial leverage with a view tosupporting and sustaining future growth. The overriding needfor regulating the Debt-Equity ratio of the Company withinprescribed limits has driven the payment of dividend to theShareholders being kept at R 100 crore during 2009-10,which has already been paid as Interim Dividend. Hence,no final dividend is proposed.ReservesAfter taking into consideration the dividend and dividendtax, a sum of R 45 crore has been transferred to GeneralReserve in compliance with the relevant provisions of theCompanies Act, 1956 and the balance amount of R 280.69crore has been transferred to Bond Redemption Reserve.Share CapitalAgainst Authorised Capital of R 2,000 crore, the entire paidup capital of the Company amounting to R 1,091 crorecontinues to be held by the President of India and hisnominees.Independent Evaluators' AssessmentCredit RatingsDomestic: During the financial year 2009-10, the Company'slong term domestic borrowing programme was awarded thehighest credit rating of "AAA/Stable", "LAAA" and "AAA"by CRISIL, ICRA and CARE respectively. With a view tocomplying with the requirements of Basel II norms, theCompany also got its short term borrowing programme rated,obtaining the highest rating of ''P1+'', ''A1+'', and "PR1+"by CRISIL, ICRA and CARE, respectively.International: During the financial year 2009-10, threeinternational credit rating agencies - Standard & Poor's, Fitchand Moody's - have awarded to IRFC "BBB-(Stable)","BBB-(Stable)" and "Baa3 (stable)" ratings respectively,which are at par with the sovereign rating for India. Besides,the Company obtained credit rating of "BBB+(Stable)" fromJapanese Credit Rating Agency in respect of its SamuraiBond issuance of March 2007. Each of the four credit ratingsis equivalent to India's sovereign rating, and is investmentgrade.Memorandum of Understanding with Ministry ofRailways, Government of India (MOU)Based on evaluation of its performance for the year 2008-09, the Company obtained 'Very Good' rating from theDepartment of Public Enterprises. The seemingly lowerlevel of performance as compared to that in severalprevious years when it had consistently obtained'Excellent' rating is mainly attributed to the fact that themethodology adopted by Department of PublicEnterprises for evaluation in respect of profitability itemsin the MoU was changed to the Company's disadvantagefrom the one adopted at the time of setting the targets.Significantly, the Company would have maintained'Excellent' rating if these parameters had been evaluatedbased on 'Profit After Current Tax' as done at the time offinalising the MoU, instead of 'Profit After Tax'. Despitethis apparently unfair though temporary setback causedby computational changes brought about, the Companyis committed to continuing all efforts to maintain highstandards of performance in future as well.The Company attaches high importance to suggestions madeby the Task Force appointed by the Department of PublicEnterprises each year to coordinate finalisation of MoU withthe Ministry of Railways. The Task Force has beenemphasizing for some years past the need for diversificationof business activities of IRFC in a measured manner. Whileparamount need for preserving the impeccable risk profileof the Company with a view to preventing adverse impacton cost structure of its debt has been adequately appreciated,11
Page 3: ANNUALREPORT2009 - 10Indian Railway
Page 6 and 7: BOARD OF DIRECTORSSmt. Sowmya Raghv
Page 8 and 9: Chairperson's StatementDear Shareho
Page 10 and 11: While the economies the world over
Page 14 and 15: the Task Force, in the MOU meeting
Page 16 and 17: safeguard its operations against ex
Page 18 and 19: compliant form. A roadmap for trans
Page 20 and 21: Right to Information Act, 2005The C
Page 22 and 23: Attendance at the Meetings of the B
Page 24: Remuneration Committee & Shareholde
Page 27 and 28: Annexure - 'A'Code of Business Cond
Page 29 and 30: ANNUALACCOUNTS2009- 10Indian Railwa
Page 31 and 32: PROFIT AND LOSS ACCOUNTFOR THE YEAR
Page 33 and 34: SCHEDULE-3LOANS(R in Lacs)DESCRIPTI
Page 35 and 36: SCHEDULE-3 Contd...LOANS(R in Lacs)
Page 43: SCHEDULE-7CURRENT ASSETS, LOANS & A
Page 46 and 47: SCHEDULE-11SALARY & OTHER EMPLOYEE
Page 48 and 49: SCHEDULE-13BOND SERVICING EXPENSES(
Page 50 and 51: SCHEDULE-16SIGNIFICANT ACCOUNTING P
Page 52 and 53: 10) Employee BenefitsEmployee Benef
Page 54 and 55: In respect of following External Co
Page 56 and 57: (b)During the year 1999 - 2000, the
Page 58 and 59: 17. Disclosures with respect to Ret
Page 60 and 61: Amount to be recognised in the Bala
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The reconciliation of weighted numb
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CASH FLOW STATEMENT FOR THE YEAR EN
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ANNEXURE REFERRED TO IN PARAGRAPH 3
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Comments of the C & A of IndiaCOMME
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Outdoor Activities
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INDIAN RAILWAY FINANCE CORPORATION
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IRFC COVER-final - Indian Railway Finance Corporation Ltd.

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