Approximately 60% of the rolling stock requirements of the Indian Railways in the last 25 years have been funded by the Indian Railway Finance Corporation (IRFC) - the PSU set up in 1986. With huge modernisation plans being firmed up, the IRFC’s role is becoming increasingly important. Corporation managing director Rajiv Datt spoke to Hindustan Times about the IRFC’s future plans and related issues. Excerpts:
The modernisation needs of the Indian Railways are being hampered due to shortage of funds. What role can the IRFC play in bridging this gap?
Since its creation in 1986, the IRFC has financed approximately 60% rolling stock requirements of the Indian Railways. These include 6073 locomotives costing Rs. 34,623 crore and 3,66,13 passenger coaches worth Rs. 23,281 crore and 16,2238 freight wagons costing Rs. 23,281 crore.
The total worth of rolling stock financed by the IRFC so far works out to be Rs. 82,447 crore.
For the 2012-13 financial year, the IRFC had fixed a target of financing rolling stock worth Rs. 15,000 crore.
Of this, Rs. 8,000 crore has already been remitted. For the year, a dividend of Rs. 100 crore has also been paid to the Railways. For 2013-14, the corporation's targets are to finance Rs. 15,100 crore worth of rolling stock.
What kind of rolling stock is proposed to be acquired by the Indian Railways for the coming fiscal? Where will this be sourced from?
These issues will be discussed at the next month's board meeting. As of now, all that can be said is that we are confident of meeting the targets.
Can you elaborate on the functions of the IRFC?
IThe IRFC was set up with the sole objective of assisting the ministry of railways in part-financing of their plan fund requirements. The company is primarily engaged in creating moving infrastructure (rolling stock assets) in the railways.
Assets financed are leased out to the railways (usually for a period of 30 years). The IRFC charges a small mark-up over its own cost for ensuring a modest growth in its profitability.
How can the performance of the IRFC be compared with that of other PSUs?
For the 2012-13 fiscal, 10 PSUs, including the IRFC, was allocated tax-free bonds totaling Rs. 60,000 crore (revised to Rs. 53,500 crore). Of this, the IRFC share was placed at Rs. 10,000 crore.
The company was able to mobilise more amount from the market through private placements and public issue in comparison to its peer companies, despite indifferent market conditions.
For the year, the company generated Rs. 6,489.99 crore (64.90% of amount authorized by ministry of finance) as against Rs. 3,668.88 crore, Rs. 2,517.35 crore and Rs. 2215.70 crore raised by the IIFCL, REC and the Hudco respectively — 36.60%, 50.35% and 44.41% of amount authorised by the Ministry of Finance.
Of the total plan outlay of the Indian Railways from 1996-97 to 2012-13 of Rs. 3, 92, 933 crore, the funding by IRFC works out to be Rs. 92,767 crore.
Therefore, the share of the IRFC in the total plan outlay works out to 23.61%.
The performance has been satisfactory.