Indian Railway Finance Corporation Ltd
Chairman Speech
Dear Shareholders,
Financial Year 2022-23 has been another turbulent year with the global
economy marred by unprecedented uncertainty. The global economic growth has moderated
amidst the prolonged Russia- Ukraine war, even though the effect of the pandemic has
receded. Food and energy price shocks affected the general prices, with wage price spiral
leading to elevated inflation across countries. The recent failures of few banks in the
United States are a reminder of the challenges posed by the interaction between tighter
monetary and financial conditions and the buildup in vulnerabilities. Even though the
financial sector remained under tremendous stress due to pandemic situation and volatility
in the market arising from global macro issues Indian economy was stable, and the Company
continued to exhibit excellent performance which was primarily attributed to its strategic
relationship with MOR, strong financials and its dedicated workforce.
Economic Overview
Despite concerns about an impending global recession, India's economy
has reaffirmed its position as one of the world's fastest growing major economies. Amid
several headwinds such as high inflation, escalating commodity prices and disruptions in
global trade due to ongoing geopolitical conflicts in Europe, the economy is projected to
have clocked a growth rate of 7.2% during FY23. The Government and the Reserve Bank of
India (RBI) have implemented several measures to address these headwinds and recent
decline in commodity prices suggest that these efforts have started to bear fruit in terms
of reining in inflation.
India has emerged as the third-largest economy in terms of purchasing
power parity.
In the Union Budget for FY24, the Government announced capex worth ? 10
lakh crores, which marked a substantial increase of 37.40% compared to the previous year.
This underscores the Government's focus on ramping up infrastructure development,
which acts as a tailwind to drive long-term economic growth. The Indian Railways received
the highest ever capital outlay of ? 2.40 lakh crores, which is further expected to
bolster India's regional connectivity.
Well-capitalised public sector banks in India have improved their
financial health, which has put them in a better position to boost credit supply. Despite
a slowdown in global economic activity, India's performance indicators do not reflect this
trend, resulting in a sense of cautious optimism.
Indian Railways Sector
Indian Railways (IR) with its 4th largest network in the world, has
been the backbone of the transportation sector in India, carrying millions of passengers
and cargo from one part of the country to the other. Indian Railways has definitely
consolidated the roots of growth in the post pandemic scenario and now the path has been
set for moving ahead with positive momentum. IR is moving forward with a vision to become
a more efficient system, to be able to keep pace with the growth and compliment the
economic development of the nation.
Indian Railways with its more than 170 years of existence, is now
making transformative changes. The vision of Indian Railways is to provide safe,
efficient, affordable, customer focused and environmentally sustainable integrated
transportation solution(s) to the country.
Indian Railways achieved its highest ever freight loading of 1512.07 MT
in 2022- 23 as compared to 1418.1 MT in 2021- 22. There is a 6.63% increase in freight
loading over FY 2021-22. Freight loading is the dominant source of revenue for IR and
incremental loading has been continuously achieved in recent years. The freight earnings
have increased by 16% compared to the same period in the previous year.
Indian Railways are now poised to take transformational leap in the
Amrit Kaal of the post-Independence period and fulfill the vision of 'Viksit Bharat' which
includes Modern, faster, available on demand passenger services and facilities, a
substantial share in freight cargo with ancillary services in logistics parks and domestic
industry driven rail infrastructure of highest standards. A record capex target of RS.
2.60 lakh crores in 2023-24 is targeted to initiate the necessary changes for this vision,
across the entire network. Achieving India's commitment of net zero carbon by 2070 will
rest in part on more rail-bound passenger and cargo movement.
The Indian Railways has set ambitious targets to contribute
approximately 1.5% to the country's GDP by developing infrastructure that can support 45%
of the modal freight share of the economy.
Operational Highlights
We have consistently exhibited robust financial performance on the back
of raising funds at competitive rates. This has helped us keep our cost of borrowings low.
Strategic relationship with the Ministry of Railways enables us to maintain a low risk
profile. The FY2022-23 has been another year of strong financials. Revenue from operations
of Company has increased by RS. 3,593 crores from RS. 20,298.27 crores in 2021-22 to RS.
23,891.27 crores in 2022-23, showing a growth of 17.70%. Profit before Tax (PBT) of
Company for the year ended 31st March 2023 was RS. 6,337.01 crores as compared to RS.
6,090.15 crores for the previous year, registering a growth of 4.05%.
Total disbursement for FY 2022-23 was RS. 32,392.63 Crores comprising
of RS. 17,000 Crores for funding of Rolling Stock, H15,392.63 Crores for financing of
Railway Projects under EBR- IF.
Borrowings during the year include Taxable Bonds worth RS. 21,558.70
crores (Previous year 19,847.90 crores), Rupee Term Loans of RS. 22,274.46 crores
(previous year RS. 42,900 Crores) and 54EC bonds of RS. 1,729.61 crores (previous year RS.
1,161.01 crores).
Company had received approval of Ministry of Finance for issue of 54EC
Capital Gain Bonds in October 2017, since then, Company is making all endeavors to
increase its market share in 54EC Bond market. In 2022-23, Company mobilized around RS.
1,729.61 crores througRs. 54EC Bond as against RS. 1,161.01 crores in 2021-22, registering
a growth of 48.97%.
The weighted average cost of the pool of borrowings made by Company
during the year 2022-23 for rolling stock worked out to 7.51 % p.a (semi-annual) as
against 6.62% (semi-Annual) during the previous year 2021-22 and WACC for project assets
under EBR-IF worked out to 7.52% for FY 2022-23 as against 6.43% (semiAnnual) during the
previous year 202122. During the year under review RBI has hiked Repo rate from 4% to
6.50%.
Company has not made any provision for tax in its books pursuant to its
decision to exercise the option of lower tax rate permitted u/s 115BAA of the Income Tax
Act, 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 dated 20th
September, 2019. The Company's taxable income was nil and it did not have to pay Minimum
Alternate Tax (MAT) with reference to its Book Profit. MAT payable u/s 115 JB was outside
the ambit of the Section 115 BAA. Thus, on adoption of Section 115 BAA of the Income Tax
Act, 1961, the Company was outside the scope and applicability of MAT provisions and there
was a zero-tax liability in the financial year 2022-23.
During the FY 2022-23, Company had declared the Interim Dividend @ 8%
i.e., RS. 0. 80/- per equity share having face value of RS. 10/- each and has also
recommended a Final Dividend for the FY 2022-23 @ 7%
1. e., RS. 0.70/- per equity share, which is subject to approval of the
shareholders at the ensuing Annual General Meeting. Thus, the total dividend for the
financial year 2022-23 would amount to RS. 1.50/- per equity share of RS. 10/- each.
Corporate Governance
Company considers good corporate governance practices a sine qua non
for sustainable business that aims at generating long term value for its shareholders and
all other stakeholders. Accordingly, it has been laying increasing emphasis upon
development of best corporate governance practices amongst Central Public Sector
Enterprises (CPSEs). Pursuant to the DPE Guidelines on Corporate Governance, quarterly
compliance report is being submitted to the Ministry of Railways, through DPE, within the
stipulated time. Further, the Report containing Annual Score (consolidated score of four
quarters) was also submitted to DPE within the prescribed timeline.
Corporate Social Responsibility
During the financial year 2022-23, the Company in accordance with the
provisions of section 135 of the Companies Act, 2013 & rules made thereunder was
required to spend RS. 91.31 crores, being 2% of its average net profits for the last three
financial years. The Company has approved a total of 16 projects with a total outlay of
RS. 59.00 crores and out of the remaining balance RS. 30.31 crores was disbursed to PM
CARES Fund, RS. 1.00 crore to Swachh Bharat Kosh and RS. 1.00 crore to Clean Ganga Fund.
Whereas the amount allocated towards 16 projects amounting to RS. 59.00 crores would be
disbursed on receipt of bills/claims from the implementing agencies in future and the same
amount has been transferred to the ‘CSR Unspent Account' maintained with Scheduled
Bank in terms of section 135(6) of the Companies Act, 2013. The Company is committed to
promoting Health and Nutrition as the theme for focused intervention as mandated by
Department of Public Enterprises for the Financial Year 2023-24.
Road Ahead
Board has authorized the Company to borrow funds amounting to RS.
50,000 Crores during FY 2023-24 for meeting the funding requirement of Indian Railways, if
any, new business activities, refinancing of existing loans and for other general
corporate purposes. For the FY 202324, the Company is looking forward for diversification
of lending portfolio and fund projects with forward or backward linkage (s) with Railways.
With India's transforming railway landscape and evolving
infrastructure,
I consider ourselves to be fortunate that Company is well positioned to
seize the emerging opportunities. Further, I am confident that Company will be able to
achieve strategic goals while delivering sustained and compelling results in the future.
I express my gratitude to customers, shareholders, suppliers,
employees, lending institutions, stakeholders and the Government of India for reposing
their confidence and trust in the Company. The Company looks forward to their continued
support for sustaining its excellent performance levels.
Regards,
Sd/-
(Shelly Verma)
Chairman and Managing Director
(Addl. Charge) & Director (Finance)
DIN:07935630
  Â
Indian Railway Finance Corporation Ltd
Directors Reports
Dear Shareholders,
Your directors have the pleasure in presenting the 36th Annual
Report of the Company along with the Audited Financial Statements, Auditor's Report
and review of the Accounts by the Comptroller & Auditor General of India for the
financial year ended 31st March 2023.
1. Financial Highlights
The highlights of financial performance of your Company for the year
ended 31st March 2023 in comparison to the year ended 31st March 2022 are summarized
below:
(Rs in Crores)
Particulars |
Year ended 31-03-2023 |
Year ended 31-03-2022 |
| I. Revenue from operations |
23,891.28 |
20,298.27 |
| II. Dividend Income |
0.56 |
0.10 |
| III. Other income |
40.80 |
2.33 |
| IV Total Revenue (I + II + III) |
23,932.63 |
20,301.60 |
| V. Expenses |
|
|
| Finance costs |
17,447.21 |
14,074.78 |
| Impairment on financial instruments |
(2.91) |
0.46 |
| Employee benefit expense |
13.09 |
10.75 |
| Depreciation and amortization expense &
Impairment |
14.06 |
14.03 |
| Other expenses |
124.16 |
111.43 |
| Total Expenses |
17,595.62 |
14,211.44 |
| VI. Profit before tax (IV-V) |
6,337.01 |
6,090.16 |
| VII. Tax expense: |
|
|
| (1) Current tax |
- |
- |
| (2) Adjustment for Earlier Years |
- |
0.32 |
| (3) Deferred tax |
- |
- |
| Total Taxes |
- |
0.32 |
| VIII.Profit (Loss) for the current Year from
continuing operations (VI-VII) |
6,337.01 |
6,089.84 |
| IX. Other Comprehensive Income |
4.56 |
(0.50) |
Revenue from operations of your Company has increased by RS. 3,593.01
crores from RS. 20,298.27 crores in 2021- 22 to RS. 23,891.28 crores in 2022-23, showing a
growth of 17.70 %.
Profit before Tax (PBT) of your Company for the year ended 31st March
2023 was RS. 6,337.01 crores as compared to RS. 6,090.16 crores for the previous year,
registering a growth of 4.05 %.
Company has not made any provision for tax in its books pursuant to its
decision to exercise the option of lower tax rate permitted u/s 115BAA of the Income Tax
Act, 1961, as introduced by the Taxation Laws (Amendment) Ordinance, 2019 dated 20th
September, 2019. The Company's taxable income was nil and it did not have to pay Minimum
Alternate Tax (MAT) with reference to its Book Profit. MAT payable u/s 115 JB was outside
the ambit of the Section 115 BAA.
Thus, on adoption of Section 115 BAA of the Income Tax Act, 1961, the
Company was outside the scope and applicability of MAT provisions and there was a zero-tax
liability in the financial year 2022-23.
Profit After Tax for the year ending 31st March 2023 was RS. 6,337.01
crores as compared to RS. 6,089.84 crores for the previous year, registering a growth of
4.06 %.
2. Dividend
Your Company seeks to strike a judicious balance between the return to
the shareholders and retaining a reasonable portion of the profit to maintain a healthy
financial leverage with a view to supporting and sustaining future borrowings and growth.
Board of Directors, in its meeting held on 10th November 2022, has
declared the Interim Dividend @ 8.0% i.e., Rs. 0. 80/- per equity share having face value
of RS. 10/- each for F.Y 2022-23, which was paid on 5th December 2022.
Further, the Board of Directors in its meeting held on 25th May 2023
has also recommended the Final Dividend @ 7%
1. e., RS. 0.70/- per equity share having a face value of RS. 10/-
each, which is subject to approval of the shareholders at the ensuing Annual General
Meeting. If approved, the total dividend for the financial year 2022-23 would amount to
RS. 1.50/- per equity share of RS. 10/- each. The total dividend pay- out for the
financial year 2022-23 including the proposed Final Dividend, would amount to RS. 1,960.28
crores.
As per regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (the "Listing Regulations"), the top 500 listed
companies shall formulate a Dividend Distribution Policy.
Accordingly, the policy was adopted to set out the parameters and
circumstances that will be taken into account by the Board in determining the distribution
of dividend to its shareholders and/or retained profits earned by the Company. The policy
is also available on the Company's website at https://irfc.co.in/sites/default/
files/inline-files/ Dividend-Distribution-Policy.pdf.
The details of unpaid/unclaimed amount of dividend as on 31st March
2023 is as follows: -
Financial Year |
Type of Dividend |
Amount (in Rs Crores) |
| 2020-21 |
Interim |
0.584 |
| 2021-22 |
Interim |
0.380 |
| 2021-22 |
Final |
0.283 |
| 2022-23 |
Interim |
0.313 |
Further, Members are requested to note that, dividends if not encashed
for a consecutive period of seven (7) years from the date of transfer to Unpaid/Unclaimed
Dividend Account of the Company, are liable to be transferred to the Investor Education
and Protection Fund ("IEPF") authority. The shares in respect of such
unpaid/unclaimed dividends are also liable to be transferred to the demat account of the
IEPF Authority. In view of this, Members are requested to claim their dividends from the
Company, within the stipulated timeline.
Details of Unpaid/Unclaimed Dividend is also available on Company's
website at https://irfc.co.in/index.php/investors/ financial-information.
3 Reserves
As per Section 45 - IC of the RBI Act, 1934, all NBFCs are required to
create a Reserve equivalent to 20% of the net profit before payment of dividend.
Accordingly, 20% of the net profit of the Company amounting to RS.
1,267.40 crores had been transferred to Reserve Fund u/s Section 45 - IC of RBI Act, 1934.
4 Share Capital
As on 31st March 2023, the Authorized Share Capital of the Company was
RS. 25,000 crores, consisting of 25,000,000,000 crores Equity Shares of RS. 10/- each. The
issued and paid- up share capital of the Company was RS. 13,068.506 crores, consisting of
13,06,85,06,000 Equity Shares of RS. 10/- each.
As on 31st March 2023, 86.36% of the paid-up equity share capital of
the Company comprising of 11,28,64,37,000 Equity Shares of RS. 10/- each were held by
President of India acting through administrative ministry i.e., Ministry of Railways
(MoR). The balance 13.64% of paid-up equity share capital was held by public. During the
period under review there is no change in authorized and paid-up share capital of the
Company.
Based on market capitalization of Company, it is in the list of top 500
listed companies on both stock exchanges i.e., NSE and BSE as on 31st March 2023.
5 Independent Evaluators' Assessment
5.1. Credit Ratings
5.1.1 Domestic: During the financial year 2022-23, the Company's
long-term domestic borrowing programme was awarded the highest credit rating of
"CRISIL AAA/ Stable", "ICRA AAA/Stable and "CARE AAA/Stable.
The Company also got its short-term borrowing programme rated,
obtaining the highest rating of "CRISIL A1+'', "ICRA A1+'', and "CARE
A1+".
5.1.2 International: During the financial year 2022-23, three
international credit rating agencies - Standard & Poor's, Fitch and Moody's - have
awarded "BBB with Stable Outlook", "BBB- with Stable Outlook" and
"Baa3 with Stable Outlook" ratings respectively to your Company. Besides, the
Company obtained an issuer specific credit rating of "BBB+ with Stable Outlook"
from the Japanese Credit Rating Agency. Each of the four credit ratings is equivalent to
India's sovereign rating and is of investment grade.
5.2. Memorandum of Understanding (MOU) with
Ministry of Railways, Government of India
The Company enters Memorandum of Understanding (MoU) with Ministry of
Railways (MoR) every year wherein Company is evaluated on various financial and
non-financial parameters. Based on its performance, the Company has been rated 'Excellent'
by the Department of Public Enterprises (DPE) for the year 2021-22.
The company has executed MoU for Financial Year 2022-23 with MoR on
15th November, 2022. In respect of parameters relating to Loans Disbursed to Total Funds
Available, Company has achieved 99.64%, there were no Overdue loans to Total Loans and NPA
to Total Loans. Further, Cost of raising funds through Bonds as compared to similarly
rated CPSEs/ entities is 17 bps lower.
6 Market Borrowings during 2022-23
As per the demands made by MoR, IRFC made a disbursement of RS.
32,392.63 crores comprising of RS. 17,000 crores for funding of Rolling Stock and RS.
15,392.63 crores (including GST under reverse charge mechanism) for financing of Railway
Projects under EBR-IF.
Borrowings during the year include Taxable Bonds worth RS. 21,558.70
crores (Previous year 19,847.90 crores), Rupee Term Loans of RS. 22,274.46 crores
(previous year RS. 42,900 crores) and 54EC bonds of RS. 1,729.61 crores (previous year RS.
1,161.01 crores). The weighted average cost of the pool of borrowings made by Company
during the year 2022-23 for rolling stock worked out to 7.51 % p.a (semi-annual) as
against 6.62% (semi-Annual) during the previous year 2021- 22 and WACC for project assets
under EBR-IF worked out to 7.52% for FY 2022-23 as against 6.43% (semi-Annual) during the
previous year 2021-22.
Company had received approval of Ministry of Finance for issue of 54EC
Capital Gain Bonds in October 2017, since then, Company is making all endeavors to
increase its market share in 54EC Bond market. In 2022-23, Company mobilized around RS.
1,729.61 crores througRs. 54EC Bond as against RS. 1,161.01 crores, registering a growth
of 48.97%.
7 Redemption of Bonds / Repayment of Loans
During the year, the Company redeemed Bonds amounting to RS. 5,944.55
crores. The Company also repaid long term loans from Banks of RS. 9,187.18 crores during
the year. The Company continues to maintain its impeccable track record of servicing its
debt in time.
8 Internal Control Systems & their adequacy
The details are given in Management Discussion and Analysis.
9 RBI Prudential Norms
Your Company is registered as a Systemically Important Non-Deposit
Taking Non- Banking Finance Company with the Reserve Bank of India. Being a Government
NBFC, your Company was exempted from the prudential norms prescribed by Reserve Bank of
India for NBFC-ND-SI, as contained in the Master Directions issued vide Notification No.
DNBR.008/CGM(CDS)-2015, dated 27th March, 2015.
The exemption was withdrawn by Reserve Bank of India from 31st May,
2018. However, the Company has obtained exemption from Reserve Bank of India from the
asset classification, income recognition, credit concentration and provisioning norms on
the direct exposure to Ministry of Railways, Govt. of India vide RBI letter dated 21st
December, 2018. The Company has also obtained relaxation in respect of lending limit
applicable to Railway CPSEs from 20% of its owned funds to 100% of its owned funds. As
such, the Company has complied with the applicable prudential norms.
Liquidity Coverage Ratio (LCR) Exemption:
RBI vide circular dated 4.11.2019 issued the guidelines covering
liquidity risk management for NBFCs, wherein RBI introduced Liquidity Coverage Ratio (LCR)
applicable on all non- deposits taking NBFCs with asset size of more than RS. 5,000
crores.
The company has got an exemption from RBI from applicability of
Liquidity Coverage Ratio (LCR) norms.
10 Lease Arrangement with the Ministry of Railways
(2022-23)
As you are aware, the financial relationship of the Company with the
Ministry of Railways is based on a Financial Lease arrangement which is regulated by a
standard lease agreement.
The weighted average cost of the pool of incremental borrowings for the
FY 2022-23 of Rolling stock assets is at 7.51% p.a. (Semi-Annual) and Project Assets under
the head EBR-IF is at 7.52% (Semi-Annual).
During the year, Company has executed the Lease Agreements for the
Project Assets funded during FY 2016- 17 (EBR-IF) and FY 2019-20 (National Projects) after
completion of moratorium period.
11 Resource Mobilization for 2023-24
Board has authorized the Company to borrow funds amounting to RS.
50,000 Crores as may be required during FY 2023-24 for meeting the funding requirement of
Indian Railways, if any, new business activities, refinancing of existing loans and for
other general corporate purposes.
12 Management Discussion and Analysis and
Company's Outlook for the future
Management Discussion and Analysis, forming part of the Directors'
Report given at ANNEXURE- I.
13 Report on Corporate Governance
The Government considers good corporate governance practices a sine qua
non for sustainable business that aims at generating long term value for its shareholders
and all other stakeholders. Accordingly, it has been laying increasing emphasis upon
development of best corporate governance practices amongst Central Public Sector
Enterprises (CPSEs). In pursuance of this philosophy, your Company continues to comply
with the ‘Guidelines on Corporate Governance for Central Public Sector Enterprises'
issued by Government of India, Department of Public Enterprises (DPE). Your Company's
Equity as well as Non-Convertible Debt Securities are listed on the stock exchanges and
Company has complied with Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015. As on 31st March 2023, there were 5 (Five)
Directors on the Board of the Company. The Board comprises of a Chairman & Managing
Director (Addl. Charge) & Director (Finance), Two Non-Official/ Independent
Director(s) and Two Government Nominee Director(s). As on the date of this Report, the
Board of Directors comprised of Five (5) Directors, with one Executive Director, Two
NonExecutive Directors (Govt. Nominees) and Two Non- Official/ Independent Directors. The
Company does not have the prescribed number of Independent Directors on its Board in
compliance of the Regulation 17(1) (a) of SEBI (LODR) Regulations 2015, specifying the
composition of Board of Directors. Being CPSE, the power to appoint Directors vests with
Government of India through Ministry of Railways (MoR) and Company has no role to play in
it. The Company has already requested MoR for appointment of requisite number of
Independent Directors. Report on Corporate Governance is enclosed as ANNEXURE- II forming
part of this report.
14 Business Responsibility & Sustainability
Report (BRSR)
The Business Responsibility & Sustainability Report, as stipulated
under Regulation 34 (2) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, is given in ANNEXURE-III and forms part of this Report.
15 Corporate Social Responsibility
Activities relating to Corporate Social Responsibility (CSR) have
become an integral part of Company's operations.
In terms of Section 135 of the Companies Act, 2013 (the Act), read with
Schedule VII thereof and Companies (Corporate Social responsibility Policy) Rules, 2014,
the Company has constituted a CSR Committee (the "Committee") comprising of two
(2) Independent Director(s) and Chairman & Managing Director (Addl. Charge) &
Director (Finance) with the Independent Director as the Chairman of the Committee as on
31st March 2023. As per the Act, Company is required to spend at least two (2) percent of
the average of its net profits of the immediately three preceding financial years on CSR
activities. The Department of Public Enterprises (DPE) has also issued guidelines in this
regard which, inter alia, require the Central Public Sector Enterprises (CPSEs) to frame a
‘CSR and Sustainability Policy'.
The ‘CSR and Sustainability Policy' of the Company is in place and
the same has also been hosted on the website at
https://irfc.co.in/sites/default/files/inline-files/CSR-Policy. pdf. The Company, like in
the past, has undertaken activities for CSR and Sustainable Development, details of which,
are given hereunder: -
During the financial year 2022-23, the Company was required to spend
RS. 91.31 crores, being 2% of its average net profits for the last three financial years.
The Company has approved a total of 16 projects with a total outlay of RS. 59.00 crores
and the remaining balance disbursed against RS. 30.31 crores to PM CARES Fund, RS. 1.00
crores to Swacch Bharat Kosh and RS. 1.00 crores to Clean Ganga Fund. Whereas the amount
allocated towards 16 projects amounting to RS. 59.00 crores would be disbursed on receipt
of bills/claims from the implementing agencies in future and the same amount has been
transferred to the ‘CSR Unspent Account' maintained with Scheduled Bank in terms of
section 135(6) of the Companies Act, 2013. The details of CSR activities as required under
the Companies Act for the financial year 2022-23 is annexed at ANNEXURE - IV.
CSR Activities proposed for the FY 2023-24
For the financial year 2023-24, the Company would be required to spend
approx. RS. 112.27 crores. The details of all the projects/ activities will be provided in
the next Annual Report.
16 Directors' Responsibility Statement
As required under Section 134(3)(c) of the Companies Act, 2013, it is
confirmed that:
a) In the preparation of the annual accounts for the year ended 31st
March 2023, the applicable Indian Accounting Standards have been followed and there are no
material departures;
b) such accounting policies have been re-drafted taking into account
the Ind-AS, judgments and estimates made are reasonable and prudent, so as to give a true
and fair view of the state of affairs of the Company at the end of the financial year and
of the profit or loss of the Company for that period;
c) Proper and sufficient care has been taken for maintenance of
adequate accounting records, in accordance with the provisions of the Companies Act, 2013,
for safeguarding the assets of the Company and for preventing and detecting fraud or other
irregularities; and
d) the Annual accounts have been prepared on ‘going concern'
basis.
e) The laid down internal financial controls to be followed by the
Company and such internal financial controls are adequate and operating effectively.
f) Proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
17 Human Resource Management
At IRFC we believe in a strong value system and best HR practices to
enhance and improve our capabilities and achieve the organizational objectives.
As on 31st March 2023, total Manpower of the Company stood at 41. To
infuse fresh Manpower in the existing Manpower pool of the Company, 4 Executives and 3
Non-Executives were inducted in the Company during FY-2022-23 through Direct and Campus
Recruitment. Women constituted 19.51% of its total workforce as on 31st March, 2023.
The Company continues to maintain high level of employee productivity
and efficiency as reflected in its low overhead to turnover ratio of less than 0.12%.
17.1 Women Employees
Your Company provides equal growth opportunities for the women in line
with Govt. of India philosophy on the subject. Being a lean organization, where Company
has 41 employees, women representation has grown across hierarchical levels. Thus, Women
constituted 19.51% of its total workforce as on 31st March 2023. As per Govt. of India
directives and guidelines from time-to-time, IRFC ensures the welfare of women employees.
17.2 Information under Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013
The Company has an Internal Complaints Committee (ICC) to examine the
case related to Sexual Harassment of Women at Workplace (Prevention, Prohibition &
Redressal) Act, 2013. The complaints received by the committee are being dealt in line
with the provisions of the Act. During the FY 2022-23, no complaint has been received.
17.3 Training & Human Resource Development
In order to enhance the skills, capabilities and knowledge of
employees, a well-defined Training and Development Policy for below board level executives
and non-executives is in place. Employee training and development is an essential element
of the Company's strategy. During the year 2022-23, the Company imparted training to 20 of
its employees to various training programmes and workshops including inhouse trainings.
These initiatives enabled the Company to achieve 95 training man days/ 912 Hrs.
17.4 Employee Welfare
The Company takes care of health and well-being of its employees by
reimbursing in-patient and out-patient medical costs, provision for leaves on medical
grounds, rehabilitation policy in case of death or permanent disability, which are
applicable for all employees.
17.5 Grievance Redressal
To promote fair and equitable employment relationship, a scheme for
Grievance Redressal of employees is also in place which ensures a time bound redressal of
grievances.
18 Auditors
M/s KBDS & Company, Chartered Accountants, have been appointed as
Statutory Auditors by Comptroller & Auditor General of India to audit the accounts of
the Company for the financial year 2022-23.
The Comptroller & Auditor General of India has undertaken
supplementary audit on accounts of the Company for the year ended 31st March 2023. The
comments of C&AG have been received and management reply there to is placed as
Annexure to comments of C&AG in the Annual Report for the year 2022-23.
Secretarial Audit for the financial year 2022-23 under Section 204 of
the Act has been conducted by M/s Akhil Rohatgi and Company, Practicing Company
Secretaries.
19 Debenture Trustees
In compliance with SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015 the details of Debenture Trustees appointed by the Company
for different series of its bonds / debentures issued from time to time, are given in
Corporate Governance Report which is enclosed as ANNEXURE-II.
20 Other Disclosures under the applicable
provisions of the Companies Act, 2013
20.1 Number of Meetings of the Board
The details of number of meetings of the Board are given in Corporate
Governance Report which is enclosed as ANNEXURE-II.
20.2 Certificate of Independence by Independent
Director
Independent Directors of the Company have given a declaration that they
meet the criteria of Independence, as laid down under Section 149 (6) of the Act, SEBI
(LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance for CPSEs.
Further, the Independent Directors of the Company are nominated /
appointed by the President of India acting through the administrative ministry, i.e.,
Ministry of Railways (MoR). Accordingly, the appointing authority considers the integrity,
expertise and experience of the individual to be nominated / appointed.
20.3 Material changes, if any, that may affect
financial position of the Company
There are no material changes which will affect financial position of
the Company.
20.4 Information in Corporate Governance Report
Information on composition, terms of reference and number of meetings
of the Board and its Committees held during the year, establishment of Vigil Mechanism/
Whistle Blower Policy and weblinks for familiarization Programmes of Directors, Policy on
Related Party Transactions, Policy for determining Material Subsidiaries, compensation to
Key Managerial Personnel, sitting fees to Directors and details regarding IEPF etc. have
been provided in the ‘Report on Corporate Governance', prepared in compliance with
the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations,
2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which
forms part of this Annual Report.
20.5 Internal financial control systems and their
adequacy
The details are given in Management Discussion and Analysis.
20.6 Audit Committee
The details pertaining to the Audit Committee are included in the
Corporate Governance Report, which is enclosed as ANNEXURE-II.
20.7 Secretarial Auditors' Report
M/s Akhil Rohatgi and Company, Practicing Company Secretaries was
appointed as the Secretarial Auditors of the Company for the FY 2022-23 by the Board of
Directors of the Company. Secretarial Audit Report is placed at ANNEXURE-V.
20.8 Secretarial Standards
Your Company complies with all applicable Secretarial Standards issued
by the Institute of Company Secretaries of India.
20.9 Certificate on Corporate Governance
M/s Akhil Rohatgi and Company, Practicing Company Secretaries has
issued certificate on Corporate Governance, placed at ANNEXURE-VI.
20.10 Risk Management
The details are given in Management Discussion and Analysis. Further,
the Company is having a Risk Management Committee ("RMC") of its directors in
place, for monitoring the integrated risks of the Company. The details pertaining to RMC
Committee are included in the Corporate Governance Report, which is enclosed as ANNEXURE-II.
20.11 Risk Based Internal Audit
RBI vide its circular February 3, 2021, had mandated the Risk Based
Internal Audit (RBIA) framework for all non- deposit taking NBFCs with asset size of RS.
5000 crores and above. In line with the RBI notification, Risk Based Internal Audit (RBIA)
policy has been formulated and approved by the Board of Directors. RBIA will help the
organization to identify the risks and address them based on the risk priority and
direction provided by the Board. A firm of Chartered Accountant has been appointed as an
expert to assist the Risk Based Internal Audit. The scope of RBIA is well defined and is
very exhaustive to take care of all functions and business of the Company depending upon
the risk assessment and control environment. Based on RBIA report, steps are taken at
regular intervals to further strengthen the existing systems and procedures.
20.12 Particulars of loans, guarantees and
investments
The particulars of loans, guarantees and investments have been
disclosed in the financial statements.
20.13 Transactions with related parties
The particulars of the transactions with related parties have been
disclosed in the financial statements.
20.14 Stock Options
The Company has not issued any stock options to the Directors or any
employee of the Company.
20.15 Significant and Material Orders passed by the Regulators or
Courts or Tribunals impacting the going concern status of the Company
There are no significant and/or material orders passed by the
Regulators or Courts or Tribunals impacting the going concern status of the Company.
20.16 Disclosure under Foreign Exchange Management
Act, 1999
The Company is in compliance with the relevant provisions of the
Foreign Exchange Management Act, 1999 pertaining to external commercial borrowing and
derivatives.
20.17 Extract of Annual Return
The extract of Annual Return is given in ANNEXURE- VII which
forms part of this report. After filing of the annual return for FY 2022- 23 with MCA, the
same will be uploaded on website of the Company at https://irfc. co.in/.
20.18 Code of Business Conduct-Declaration by CEO
Declaration by CEO on compliance of the "Code of Business Conduct
and Ethics for Board Members and Senior Management" for the year 2022-23 is placed at
ANNEXURE-VIII.
20.19 CEO/CFO Certification
As required by Regulation 17 (8) of the SEBI (LODR) Regulations, 2015,
the Compliance Certificate as specified in Part B of Schedule II of the said Regulation
duly signed by Ms. Shelly Verma, Chairman & Managing Director (Addl. Charge), CEO
& Director (Finance) and Shri Sunil Kumar Goel, Chief Financial Officer (CFO) was
placed before the Board of Directors in their Meeting held on 25th May 2023. The same is
enclosed as ANNEXURE-IX.
20.20 Particulars of Employees receiving high
emuneration & other particulars of employees
Since IRFC is a Government Company, provisions of Section 197 are not
applicable to it. Hence, the details have not been given.
20.21 Deposits from public
The Company has not accepted any fixed deposits during the period under
review and the Board of Directors has passed requisite resolution in this regard, in
compliance of RBI guidelines.
20.22 Cost Records
The Central Government has not prescribed the maintenance of cost
records for the products/services of the Company under the Companies (Cost Records and
Audit) Rules, 2014 read with the Companies (Cost Records and Audit) Amendment Rules, 2014
prescribed by the Central Government under Section 148 of the Companies Act, 2013.
Accordingly, cost accounts and records are not required to be maintained by the Company.
20.23 Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings and Outgo
Pursuant to the Provision of Section 134(3)(m) of the Companies Act,
2013, in respect of Conservation of Energy and Technology absorption, following steps have
been taken by your Company: -
To save power, the Company purchases LED/ LCD monitors while replacing
the old monitors. Employees are encouraged to keep their gadgets in power saving mode,
wherever possible. The Company now replaces its old electrical items, gadgets, etc. with
power efficient units. The internal lightning of office by energy- efficient LED lights
has helped to conserve electricity.
20.24 Foreign exchange earnings & outgo
Your Company has put in place Comprehensive Risk Management policy to
manage risks associated with foreign currency borrowings. The Company enters into hedging
transactions to cover exchange rate and interest rate risk through various instruments
like forwards and swaps. Details of Foreign exchange earnings & outgo have been given
in the Notes to Accounts.
20.25 LIBOR Transition
ISDA (International Swaps and Derivatives Association), the globally
recognized statutory body governing the global derivative deals and benchmark transitions,
had come up with the ISDA 2020 IBOR Fallbacks Protocol (commonly referred to as Fallback
Protocol) to move all the legacy contracts from existing benchmarks to new benchmarks
under the Interest Rate Benchmark Reform. For USD LIBOR benchmark to be transitioned with
effect from 30th June 2023, the Alternative Reference Rates Committee (ARRC) set up by the
Federal Reserve Bank had recommended the Secured Overnight Financing Rate (SOFR) as the
new benchmark as against USD LIBOR.
IRFC is currently having three facilities of SBI Bahrain USD 300
million, SBI Hong Kong USD 1 bn and SBI Hong Kong USD 2 bn having interest payment
exposure in USD LIBOR which have been transitioned from USD LIBOR to SOFR. Such transition
has been undertaken by signing a bilateral Amendment and Restated agreement for each of
the three facilities rather than signing the ISDA IBOR Fallback Protocol. IRFC has also
executed the revised term sheets with all the relevant hedge counterparties being impacted
by such transition and accordingly the exposure has been suitably shifted from USD LIBOR
to SOFR.
There were two other facilities of AFLAC to the tune of JPY 15 billion
(equivalent to USD 183 million) for which IRFC entered into a Cross Currency Swap
resulting in exposure to USD LIBOR which was further hedged by taking an Interest Rate
Swap. This USD LIBOR exposure has also been transitioned to SOFR by signing the ISDA IBOR
Fallback Protocol.
20.26 Expenditure on R&D
This is not applicable, as IRFC is engaged only in financing
activities.
20.27 Captial Commitment
IRFC has entered into a lease agreement with RLDA for allotment of 6019
sq mtr of office space with total value of the lease premium amounting to RS. 195.52
crores out of which RS. 48.88 crores is paid and balance of RS. 146.64 crores is yet to be
paid.
IRFC entered into a contract with M/S RailTel Limited for
implementation of ERP amounting to RS. 20.81 crores payment for this is yet to be made,
IRFC has also appointed M/s KPMG for providing consultancy service for implementation of
ERP at a total cost of RS. 0.79 crores, out of which RS. 0.16 crores is paid and balance
amount of RS. 0.64 crores is yet to be paid.
20.28 Reporting of Frauds by Auditors
During the year under review, neither the statutory auditors nor the
secretarial auditor has reported to the audit committee, under Section 143(12) of the
Companies Act, 2013, any instance of fraud committed against the Company by its officers
or employees, the details of which need to be mentioned in the Board's Report.
20.29 Change in nature of Business
There was no change in the nature of business of the Company during the
financial year 2022-23.
20.30 The names of companies which have become or ceased to be its
Subsidiaries, joint ventures or associate companies
There are no Subsidiaries, joint ventures, or associate companies
during the year 2022-23.
20.31 The details of application made or any proceeding pending under
the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their
status as at the end of the financial year
There was no application made nor any proceeding pending under the
Insolvency and Bankruptcy Code, 2016 (31 of 2016) against the Company.
21 Compliance of MSME Guidelines
Your Company has in place, a Manual for Procurement of Goods, Services
and Works, which provides guidelines to expedite decision making process by way of
consolidating, simplifying and streamlining the various steps to be followed in the
process of award of contracts from the procurement of goods, works & services as well
as during its implementation on the ground.
The procurement from MSMEs complies to Public Procurement Policy during
the financial year 2022-23 as placed below:
(Rs in Crores)
| 1 Total annual procurement |
12.47 |
| 2 Target % age of annual procurement |
31.25% |
| 3 Total value of goods and services procured
from MSMEs (including MSMEs owned by SC/ST entrepreneurs) |
4.25 |
| 4 Total value of goods and services procured
from only MSMEs owned by SC/ST entrepreneurs |
Nil |
| 5 % age of procurement from MSMEs (including
MSMEs owned by SC/ ST entrepreneurs) out of total procurement |
34.09% |
| 6 % age of procurement from only MSMEs owned
by SC/ ST entrepreneurs out of total procurement |
Nil |
| 7 % age of procurement from Women MSMEs |
15.04% |
22 Vigilance Activities
Ministry of Railways have nominated a part time Chief Vigilance Officer
(CVO). The CVO carries out internal scrutiny of the activities on random basis to ensure
compliance with the laid down CVC guidelines and procedures. During the vigilance
awareness week preventive vigilance workshops were also conducted for the benefit of
employees of IRFC. These workshops inter-alia covers contract management, provision of CDA
Rules, compliances of rules and policies, deliberations of case studies etc., such
workshops have ensured that best ethical practices are followed in the organization.
The Company has observed Vigilance Awareness Week in 2022-23 from
October 31,2022 to November 6, 2022, on the theme "Corruption free India for a
developed Nation", in line with the circular issued in this regard by the Central
Vigilance Commission. All employees were administered an Integrity Pledge, to spread
awareness about vigilance amongst the employees, as well as public at large.
23 Official Language
The official language implementation committee of the Company meets
every quarter to monitor and review the progress made for achieving the targets fixed in
Annual Program issued by the official language department Ministry of Home Affairs,
Government of India. Effective measures were taken to bring out progressively higher use
of Hindi in day-to-day working of the Company. Hindi workshops / trainings are regularly
organized and for these employees are sponsored for the trainings/workshops.
Hindi week was observed in your Company from 14th September 2022 to
29th September, 2022 to motivate the employees for the progressive use of Hindi in their
day to- day work. Several competitions / programmes were organized to encourage the
employees to work in Hindi and create a conducive atmosphere. The participants were
accordingly awarded. Further, cash award was also given to employees making most extensive
use of Hindi in their day to day official work under the Government scheme.
The official website of your Company exists in fully bilingual form and
contains all information of interest to its stakeholders.
24 Presidential Directive
Presidential Directive No.2023/PL/47/3 dated 29th May 2023 has been
received for insertion of new article in articles of Association of the Company.
25 Right to Information Act, 2005
The Government of India's instructions on Right to Information Act,
2005 is being complied with. All relevant information has been hosted on the Company's
website.
26 Board of Directors and Key Managerial Personnel
Being a Government Company, the power to appoint Directors on the Board
of the Company is vested with the President of India acting through the Ministry of
Railways (MoR), Government of India. The remuneration of Directors and employees of the
Company is fixed as per the extant Guidelines issued by Department of Public Enterprises
(DPE), from time to time. The sitting fee paid to Non- Official/ Independent Directors for
attending the meetings of Board and Committees thereof, are within the limits prescribed
under the Companies Act, 2013. The Government Nominee Director is not entitled to receive
any remuneration or sitting fee from the Company, as per the norms of Government of India.
Details of remuneration and sitting fees paid to Directors are appearing in the
‘Report on Corporate Governance' annexed to this Report.
Further, being a CPSE, the remuneration of Functional Directors, Key
Managerial Personnel and other employees of the Company, including Senior Management
Personnel, is determined as per the extant guidelines on pay, perquisites, allowances etc.
issued by the Department of Public Enterprises (DPE) and/or Government of India from time
to time.
Pursuant to Section 203 of the Companies Act, 2013, the Board of
Directors of the Company has designated the Chairman and Managing Director as CEO, Group
General Manager (Finance) as CFO, and Company Secretary (CS) as Key Managerial Personnel
(KMPs) of the Company. Being a Government Company, the role of CEO is being performed by
Chairman and Managing Director (CMD) and the role of CFO is performed by Group General
Manager (Finance) of the Company.
The following changes have taken place in the composition of the Key
Managerial Personnel: -
1. Ms. Shelly Verma, Director (Finance) has been entrusted with the
additional charge of post of Chairman and Managing Director for a period of 1 year w.e.f.
15th October 2022 and accordingly she has been designated as Chairman and Managing
Director (Addl. Charge), CEO & Director (Finance) of the Company.
2. Shri Sunil Kumar Goel, Group General Manager (Finance) is designated
as Chief Financial Officer (CFO) and KMP of the Company, w.e.f. 25th May 2023.
3. Ministry of Railways, vide order no 2018/E(O)II/40/19 dated 6th May
2023 has communicated the pre-mature termination of the services of Shri Amitabh Banerjee
from the post of CMD, Indian Railway Finance Corporation Limited (IRFC) w.e.f. 15th
October 2022.
4. Appointment of Shri Vallabhbhai Maneklal Patel (DIN: 07713055) has
been regularized in the 35th AGM of the Company held on 23rd September, 2022 who was
appointed as an Additional Director (Non- Official/ Independent Director) of the Company
as per Ministry of Railways (MoR) order no. 2019/PL/57/22 dated 9th November 2021 with
effect from 10th November 2021, under Section 161 of the Co's Act, 2013.
5. Appointment of Smt. Sheela Pandit (DIN: 09403193) has been
regularized in the 35th AGM of the Company held on 23rd September, 2022 who was appointed
as an Additional Director (Non- Official/Independent Director) of the Company as per
Ministry of Railways (MoR) order no. 2019/PL/57/22 dated 9th November 2021 with effect
from 22nd November 2021, under Section 161 of the Co's Act, 2013.
Director(s) retiring & seeking appointment/
reappointment in the ensuing AGM
In accordance with the provisions of the Companies Act, 2013 and
Article 210 of the Articles of Association of the Company, Shri Bhaskar Choradia
(DIN:08975719), Govt. Nominee Director shall retire by rotation at the ensuing 36th Annual
General Meeting of the Company and being eligible, offers himself for re-appointment. The
Board of Directors recommends his re-appointment. Brief resume and other particulars of
Shri. Bhaskar Choradia is annexed to the Notice of AGM.
27 Evaluation of Board of Directors/ Independent
Directors
As per the statutory provisions, a listed company is required to
disclose in its Board's Report, a statement indicating the manner in which formal annual
evaluation of the performance of the Board, its committees and individual Directors has
been made and the criteria for performance evaluation of its Independent Directors, as
laid down by the Nomination & Remuneration Committee.
However, the Ministry of Corporate Affairs ("MCA") vide its
notification dated June 5, 2015, has, inter-alia, exempted Government companies from the
above requirement. Directors are evaluated by the Ministry or Department of the Central
Government, which is administratively in charge of the company, as per its own evaluation
methodology. Further, MCA vide notification dated July 5, 2017, also prescribed that the
provisions relating to review of performance of Independent Directors and evaluation
mechanism prescribed in Schedule IV of the Companies Act, 2013, is not applicable to
Government companies.
Accordingly, being a Government company, IRFC is, interalia, exempted
in terms of the above notifications, as the evaluation of performance of all members of
the Board of the Company is being done by the administrative ministry i.e., the Ministry
of Railways and/or by the Department of Public Enterprises (DPE).
28 ‘Think Green, Go Green' Initiative
The Companies Act, 2013 permits companies to send documents like Notice
of Annual General Meeting, Annual Report etc. through electronic means to its members at
their registered email addresses. As a responsible corporate citizen, the Company has
actively supported the implementation of ‘Green Initiative' of the Ministry of
Corporate Affairs (MCA) and effected electronic delivery of Notices and Annual Reports to
shareholders, whose email ids are registered. The intimation of dividend (interim/ final)
is also being sent electronically to such shareholders. Further, pursuant to Section 108
of the Companies Act, 2013 read with Rule 20 of the Companies (Management and
Administration) Rules, 2014, the Company is providing e-voting facility to all members to
enable them to cast their votes electronically in respect of resolutions set forth in
postal ballot and Annual General Meeting (AGM). The Company will also be conducting the
AGM this year through video conferencing / other audio-visual means. Members can refer to
the detailed instructions for e-voting and electronic participation in the AGM, as
provided in the Notice of AGM. Members, who have not registered their e-mail addresses so
far, are requested to register their e-mail addresses with the Registrar and Share
Transfer Agent (R&TA) of the Company or their respective Depository Participant (DP)
and take part in the green initiative.
29 Acknowledgements
Your Company is grateful to the Ministry of Railways, Ministry of
Finance, Ministry of Corporate Affairs, Public Enterprises Selection Board, Department of
Public Enterprises, National Informatics Centre, other Departments of the Government,
Securities and Exchange Board of India and the Reserve Bank of India, for their
co-operation, assistance, active and timely support, and guidance rendered from time to
time. The Company is also thankful to all its Shareholders, Bondholders, Banks, Financial
Institutions, Arrangers, Registrar and Transfer Agents, Bond Holders Trustees, National
Stock Exchange of India Limited, BSE Limited, Life Insurance Corporation of India and
other stakeholders for reposing their confidence and trust in the Company. The Company
looks forward to their continued support for sustaining its excellent performance levels.
The Company expresses gratitude to the Comptroller & Auditor General of India, the
Statutory Auditors, Secretarial Auditors and the Internal Auditors for their valuable
support and guidance. The Board of Directors express their deep appreciation in
recognition of the valuable contribution made by the Company's small team of officers and
employees, which has enabled the Company to successfully meet the funding targets set by
the Ministry of Railways, while consolidating its position as one of the most vibrant
public financial institutions in the country.
For and on behalf of the Board of
Directors |
|
|
Sd/- |
|
(Shelly Verma) |
|
Chairman & Managing Director |
|
(Addl. Charge) & Director (Finance) |
|
(DIN: 07935630) |
| Place : New Delhi |
|
| Date : 11th August, 2023 |
|
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