Statement of Assets and Liabilities for last Five Years and Latest ...

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i(ICRA Credit PerspectiveIndian Railway Finance Corporation LimitedSummary Rating RationaleParametersA Business Risk1 Business MixOverall CommentsIRFC's primary activity is to mobilise funds, on behalf of Indian Railways (IR), to providefinance to Railways to procure locomotives, passenger coaches. and wagons.IRFC loan book mainly comprised loans to Ministry of Railways (MaR), accounted for g7%of its loan portfolio as on March 31, 2012, and project finance loans to other MaR entitles.IRFC's loan repayment is made through budgetary allocation by MoR every year.2 Managementand SystemsIRFC has been raising funds at very competitive cost driven by its quasi sovereign statusand strong financial flexibility. IRFC onlends to MoR at predetermined IRRs; IRFC chargesan interest spread of around 50-60 bps over Its funding cost to MoRlRFC Is wholly owned subsidiary of MaR. The managing director of IRFC Is nominated byMaR.lRFC has a lean operating structure because of Its nature of business and entire lendingto MaR and MoR related entities.3 OperatingEnvironmentB Financial Risk1 ProfitabilitySlowdown in economic growth along with persistent high Interest rates has impacted assetquality and portfolio vulnerability of banks and other financial companies. The slowdown ineconomic activity could Impact operating performance of Indian Railways, however sameIs unlikely to have significant Impact on debt repayment capacity of Railways.IRFC enters into a tease agreement with MaR every year; the Interest spread of IRFC Isfixed (around 50-50 bps) and protected throughout the tenure of the loan under terms of thelease agreement. Interest rate and foreign currency risk is also transferred to MoR throughtease agreement.As for reported profitability, supported by adequate net Interest margins (NIMs), relativelylow operating expenses (being a lean operating structure entity) and superior asset quality(nil gross NPAs), the profitability (PBT/ATA) of IRFC has been adequate. However, highertax expenses have Impacted its retum on net on worth to some extent.2 LiquidityIRFC has a well matched asset liability profile given the tenure of Lease Agreements(weighted average tenure around 10 years) and the weighted average maturity of itsborrowings (around 8-12 years over last few years).The liquidity profile (ALM) of IRFC Is also strengthened by strong financial flexibility of IRFC.Moreover, as per lease agreement With MaR, IRFC can seek advance lease rentals fromMaR in case of need.3 Capitalisation4 Asset QualityGearing of IRFC has been around ten times (limit set by Its BoD) over last many years. Totalborrowings of IRFC increased significantly over last few years given sizeable increase Inborrowing programme {which Is fixed by MaR) however at the same MoR has infused capital(Rs.1 ,852 crore5 over last four years, 2008-09 to 2011-12) to enable IRFC to maintain gearing belowten times. Regulatory CRAR of IRFC stands at 195% as on March 31, 2012 as exposure toMoR attracts zero risk weight.Asset quality profile of IRFC is superior with nil gross and net NPAs as on March 31, 2012;the asset quality profile reflects very low credit risk given entire exposure to MoRand relatedentities.5Including share application money of Rs 250 crcre as on Mar-12 for which shares were allotted in 2012-1-=t
CREDIT PERSPECTIVEDependence on MOR for business volumes leads to concentration risk, thoughrole as sole arranger of lease finance for MOR assures business volumesIRFC is wholly owned subsidiary of Ministry of Railways (MoR) and raises funds to finance the MOR'sprocurement of Locomotives, Passenger Coaches & Wagons. IRFC has been mobilizing funds atcompetitive rates primarily toChart 1: Trend of lease disbursement of IRFCon lend these to MoR in theform of leased assets. As on1400012.00%March 31, 2012, around 94%1200010.00% of IRFC's total assets were in100008.00% form of leased assets/loans to8000MoR and long term loans to6.00%6000other MoR agencies like RVNL4.00%4000and Railtel Corporation of India20002.00% Ltd. balance being fixeddeposits with banks and other00.00%assets. On the back of[':f~ ~
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Statement of Assets and Liabilities
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CASH FLOW STATEMENTAnnexure - III(
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2. Reserves and Surplus( in Lakhs)P
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3.1.1 Maturity profile and Rate of
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65th "J" Taxable Non‐Cum. Bonds 8
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starting from 27‐07‐201416th "O
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HDFC Bank Ltd. 8.44%, Fixed 1‐Apr
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Syndicated Foreign Currency Loan‐
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As at30‐09‐2012As at31‐03‐2
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Total FixedAssets 1,721.57 1,707.80
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Balance in Franking Machine 0.34 0.
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18. Other IncomeTotal 268780.41 464
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Office Maintenance Expenses 20.25 3
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Significant Accounting policies and
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y the Reserve Bank of India vide th
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(f) (i) Interest rate variation on
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1 JPY 3 Billion 37.04 Million 1 JPY
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11.a. The Company has not taken on
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Gross Investment in Lease and Prese
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the year plan assetsTotal Gain / (L
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*The above provisions are liabiliti
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A. Significant Accounting PoliciesF
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Further, in terms of Draft Guidelin
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(P.Y. Rs. 4590 Lakhs). After adjust
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No. ofContractsAs at 31-03-2012 As
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10. Expenditure in Foreign Currency
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E. Less Capital Recovery provided u
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Changes in the Fair Value of Plan A
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Actuarial Assumptions:AssumptionsGr
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amortised over the balance tenor of
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) Recognition at the end of Account
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Deferred tax expense or benefit is
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Finance has exempted the Lease Agre
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The foreign currency borrowings out
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10. Expenditure in Foreign Currency
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15. Major components of net deferre
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Current Service Cost 3.05 1.63 1.02
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Actuarial Assumptions:As on 31-03-2
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portion of the future savings in th
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) Recognition at the end of Account
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10) Employee BenefitsEmployee Benef
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5. Decrease in liability due to exc
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7. Office Building including parkin
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12. The balances under some items o
Page 89 and 90: Unearned Finance Income 2009322 171
Page 91 and 92: the yearActualReturn onplan assets1
Page 93 and 94: Statementof Profit &LossActuarial A
Page 95 and 96: amortised over the balance tenor of
Page 97 and 98: ) Recognition at the end of Account
Page 99 and 100: 10) Employee BenefitsEmployee Benef
Page 101 and 102: amortisation in future, of the amou
Page 103 and 104: As part of hedging strategy, the Co
Page 105 and 106: Since the entire future lease renta
Page 107 and 108: assets assigned during the yearF. C
Page 109 and 110: Benefits Paid - -Fair Value of Plan
Page 111 and 112: value Rs. 1,000/- eachc) Earning Pe
Page 113 and 114: Financial Year 2007-08A. Significan
Page 115 and 116: and are capable of reversal in one
Page 117 and 118: ForeignCurrency1 JPY 2.65 Billion U
Page 119 and 120: Govt. may from time to time specify
Page 121 and 122: previous Financial YearB. Less valu
Page 123 and 124: 22. Payment to auditors include Rs.
Page 125 and 126: Annexure - VIIStatement of Dividend
Page 127 and 128: Annexure - IXRelated Party Transact
Page 129 and 130: Annexure - XICapitalisation Stateme
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Page 133 and 134: '-. ,,, I__ , __ , _____ ~-~---..
Page 135 and 136: Credit Rating Report 1Indian Railwa
Page 137 and 138: Given IRFC's modest accruals to net
Page 139: Credit Strengths.. Strong ownership
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Page 145 and 146: ANNEXURE 1: RATING DETAILSInstrumen
Page 147 and 148: ICRA Credit PerspectiveIndian Railw
Page 149 and 150: ·PROFIT: & .LOSS ACCOUNT_t'lo of O
Page 151 and 152: This is a system generated report a
Page 155 and 156: Sub : Trade statistics of IRFC N1 f
Page 161 and 162: Sub : Trade statistics of IRFC N2 f
Page 163 and 164: SCRIP CODE TRADE DATE ABBREVIATEDNA
Page 171 and 172: Ref. No. :NSE/LIST/2012Date :Decemb
Page 173 and 174: Sub : Trade Statistics Report from
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Sub : Trade Statistics Report from
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ANNXEUREIVCONSENT OF DEBENTURE TRUS
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