The company has an option to retain oversubscription up to Rs.8,886 cr

Indian Railway Finance Corporation Ltd (IRFC) is launching a tax-free bond issue to raise Rs.8,886 crore to augment resources for buying rolling stock for the Indian railways.

As per Central Board of Direct Taxes (CBDT) notification, IRFC has been authorised to issue bonds up to Rs.10,000 crore during 2013 financial year.

Out of this, the company had already raised Rs.1,114 crore through private placement of bonds.

This trench issue by the company is of bonds aggregating Rs.1,000 crore with an option to retain oversubscription of up to Rs.8,886 crore.

The public issue of tax-free, secured, redeemable, non-convertible bonds in the nature of debentures will open on January 21 and close on January 29. The face value of each bond is Rs.1,000, and an applicant can apply for a minimum of five bonds. However, there is no upper limit.

The bonds have a tenure of 10 years and 15 years and have an interest rate of 7.18 per cent and 7.34 per cent per annum respectively.

Rating

The bonds, proposed to be issued, have been rated AAA/stable by Crisil, CARE AAA by Care and AAA by ICRA. These ratings are considered to have the highest degree of safety with regard to timely servicing of financial obligation and carry lowest credit risk.

“We are a zero NPA (non-performing assets) company and have been growing at a compounded annual growth rate (CAGR) of 21 per cent. We buy rolling stocks, including locomotives, coaches and wagons and lease them out to the Indian Railways for 30 years. Our income is the lease rentals from these assets and Indian Railways pays us twice a year and there has never been a default,” said Rajiv Datt, Managing Director, IRFC.

Utilisation

He said the funds raised through this issue would be utilised towards financing the acquisition of rolling stock which would be leased to the Ministry of Railways in line with the present business initiatives. As per the last Railways budget, IRFC was to finance rolling stocks worth Rs.15,000 crore in financial year 2012-13.

The bonds will be listed on the BSE and NSE within 12 working days of the issue closing date.

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