Annual Report English.pmd - Indian Railway Finance Corporation Ltd.

Media CoverageTwo reputed international publications viz. International Financing Review (IFR) and Finance Asia havelauded JPY 13 billion Euro Bond issue of IRFC for its aggressive pricing and choice of JPY as thiscurrency of borrowing. This is the first Indian Credit to issue publicly in Yen since 1991.Credit Research Reports on the Company brought out by Research Divisions of some of the banks havebeen circulated amongst prospective investors during the year. These Reports highlight the position ofpre-eminence of your Company amongst issuers out of India.Performance HighlightsDuring the year under report, your Company has posted profit after tax of Rs.404.77 crore, up Rs.25.92crore over the performance of the previous year. Earning per share has increased to Rs.1,744.71 fromRs.1,632.98 and the over-head to turnover ratio is only 0.15%.Your Directors have pleasure in informing that in spite of incremental borrowing for the year, prudentfinancial management has resulted in a reduction in expenditure by Rs.28.32 crore from Rs.1,483.54crore during 2003-04 to Rs.1,455.22 crore during 2004-05. The operating income has also gone up byabout Rs.38.08 crore. Increase in other income and the savings in expenditure have helped to shore upthe profit before tax by Rs.92.92 crore.The Balance Sheet size of your Company stands at Rs.20,450.04 crore, with a net worth of Rs.2,392.91crore and with no Non-performing Assets (NPA) in the books of your Company.Savings achieved through Financial EngineeringYour Directors take pleasure in informing that your Company has successfully negotiated and broughtdown the contracted interest payment liability of the existing outstanding borrowings, as outlined below :-(i) Interest re-structuring on Term Loans from BanksDuring the year under review, your Company has successfully refinanced / restructured some of the highcost term loans which would result in a saving of Rs.9.32 crore over the remaining life of these loans.(ii) Interest re-structuring on Bond IssueYour Company exercised call option and redeemed in March, 2005, 18 th Series taxable bonds bearing acoupon of 10.95% and having a residual maturity of two years. Refinancing has been done by availingterm loan of matching tenor. This would result in a saving of Rs.19.10 crore to your Company over theremaining life of these bonds.(iii) Foreign Currency Borrowings and risk managementDuring the year under review, your Company has successfully raised USD 250 Million equivalent of fundsthrough external commercial borrowings.A sum of USD 100 Million has been raised through syndicated Loan Market. Besides, IRFC raised JPY2.65 Billion (Equivalent to USD 25 Million) through private placement of bonds in the Japanese capitalmarket and JPY 13 Billion (equivalent to about USD 125 million) through Euro Yen Bonds in the offshoremarket at coupons of 1.85% and 1.43% respectively. This has enabled the Company to drive down thecost. This has also helped the Company to diversify its investor base further.Your Directors have pleasure in informing that your Company’s presence among the international investorshas been further established as evidenced from the overwhelming response received by its offshoreissues.Your Directors are also pleased to state that your company has prudently eliminated the exchange raterisk associated with the principal repayment in respect of USD 100 Million and JPY 13 Billion, at competitiveprices. Prudent timing of the hedging has resulted in reducing the principal repayment in rupee terms ata lower level than the inward remittances, resulting in upfront saving of Rs.11.17 crore.5