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

(f) (i) Interest rate variation on the floating rate linked rupee borrowings and interest rate andexchange rate variations on interest payments in case of the foreign currency borrowings areadjusted against the Lease Income in terms of the variation clauses in the lease agreementsexecuted with the Ministry of Railways. During the half year, such differential has resulted in anamount of Rs. 4522 Lakhs accruing to the company (P.Y. Rs. 7578 Lakhs), which has beenaccounted for in the Lease Income.(ii) In respect of foreign currency borrowings, which have not been hedged, variation clause havebeen incorporated in the lease agreements specifying notional swap cost adopted for workingout the cost of funds on the leases executed with MOR. Swap cost in respect of these foreigncurrency borrowings is compared with the amount recovered by the company on such accountand accordingly, the same is adjusted against the lease income. During the half year ended 30thSeptember, 2012 in respect of these foreign currency borrowings, the company has recovered asum of Rs. 5563 Lakhs (P.Y. Rs. 11133 Lakhs) on this account from MOR against the actual swapcost payments of Rs. NIL (P.Y. Rs. 2203 Lakhs). After adjusting swap cost, an amount of Rs. 5563Lakhs has been refunded to MOR (P.Y. Rs. 8930 Lakhs refunded to MOR).(iii) Interest expense in respect of interest accrued but not due on foreign currency loans hasbeen considered at base interest / exchange rate and the difference on account of variationbetween base rate and the rate prevailing on the reporting date has been shown as recoverable/ payable to MOR. During the current year, the amount payable to MOR on such account worksout to Rs. 40 Lakhs (P.Y. Rs. 453 Lakhs).2.(a) The Reserve Bank of India has issued Non‐Banking Financial (Non‐Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions, 2007 vide notification no.DNBS.193DG(VL)‐2007 dated 22 nd February 2007. The Company, being a Government Company and notaccepting / holding public deposits, these Directions, except the provisions contained inParagraph 19 thereof, are not applicable to the Company. Further, Reserve Bank of India (RBI)vide letter dated 19 th March 2010 has sought a road map from the Company for compliancewith the prudential norms issued by RBI. The Company has asked for certain clarifications fromRBI after which road map for complying with RBI prudential norms will be submitted.(b) In terms of Reserve Bank of India Notification No.DNBC.138/CGM (VSNM) – 2000 dated 13 thJanuary 2000, provisions of Section 45 IC of the Reserve Bank of India Act, 1934 (2 of 1934)regarding creation of Reserve Fund, do not apply to the Company.(c) In terms of Ministry of Corporate Affairs (MCA) circular no.9/2002 dated 18th April, 2002, theCompany, being a Non‐Banking Finance Company registered with RBI, is required to create BondRedemption Reserve equivalent to 50% of the value of the bonds raised through Public issue.The Company has raised Rs.626889 Lacs through public issue of tax free bonds in FY 2011‐12.Accordingly, the entire profit of for the half year ended 30th September, 2012 has beentransferred to Bond Redemption Reserve.3. The Finance Act, 2001 provides for levy of service tax on the finance and interest chargesrecovered through lease rental installments on the Financial Leases entered on or after 16‐07‐2001. The Central Government vide Order No.1/1/2003‐ST dated 30 th April 2003 andsubsequent clarification dated 15‐12‐2006 issued by Ministry of Finance has exempted the Lease