Indian Railway Finance Corporation Limited Offers Tax Free Bonds Tranche-I

Ministry of Railways

Railway Finance Corporation Limited Offers

Free Bonds Tranche-I to Raise upto Rs. 6,300 Crore

Issue to Open Tomorrow

Railway Finance Corporation Limited (IRFC), the financing arm of Indian
Railways, is proposing to issue Tax Free, Secured, Redeemable, Non-Convertible
Bonds of face value of Rs. 1,000 each in the nature of Debentures, having
benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended
(‘Bonds’) aggregating to  Rs.3,000 crore with an option to retain
oversubscription of upto the shelf limit of` Rs. 6,300 crore (‘Issue’).

The application for
subscription of Bonds should be for a minimum of 10 Bonds and in multiples of 5
Bonds thereafter. The Issue will open for subscription on January 27, 2012, and
close on February 10, 2012, or earlier (subject to the Issue being open for a
minimum period of 3 days), or extension by such period, upto a period of 30
days from the date of opening of the Issue, as may be decided by the Board of
Directors or by a duly constituted committee of the Company. The Bonds shall
carry a coupon rate of 8.00% p.a for 10 years (Series I) and 8.10% p.a for 15
years (Series II). An additional coupon rate of 0.15% p.a. and 0.20% p.a. on
series 1 and series 2 respectively shall be available to Resident Indian
individuals, Hindu Undivided Families through the Karta and Non Resident
Indians on repatriation as well as non-repatriation basis, applying for an
amount aggregating upto and including  Rs.5 lakhs across all Series in the
tranche (available only to the original allottees). The Bonds are proposed to
be listed on NSE and BSE.

The Bonds have been rated ‘CRISIL AAA/Stable’ by CRISIL, ‘[ICRA] AAA’ by ICRA
and ‘CARE AAA’ by CARE, indicating highest degree of safety for timely
servicing of financial obligations.

Investors will have an option to hold the bonds either in physical or in demat
form.  The Bonds will be secured by way of a pari passu charge on the
movable assets of the Company comprising of rolling stock such as wagons,
locomotives and coaches.

SBI Capital Markets Limited, A. K. Capital Services Limited and ICICI Securities
Limited are the Lead Managers to the Issue. Indian Bank shall be the Trustee to
the Issue.

The Company intends to utilize the Issue proceeds for financing the acquisition
of rolling stock and financing the capacity enhancement works in the Indian

All investors proposing to participate in the Issue should invest only on the
basis of the information contained in the Shelf Prospectus and the Prospectus
Tranche-1, both dated January 19, 2012.

The Shelf Prospectus and the Prospectus Tranche 1 are available on the website
of the NSE and BSE at www.nseindia.com and www.bseindia.com , the website of
SEBI at www.sebi.gov.in, the website of the Company at www.irfc.nic.in and the
respective websites of the Lead Managers at www.sbicaps.com, www.akcapindia.com
and www.icicisecurities.com.

IRFC is the financing arm of the Indian Railways. 100% shareholding in IRFC is
held by the President of India acting through Ministry of Railways. The Company
has been notified as a Public Financial Institution under Section 4A of the
Companies Act, 1956 and registered as a Non-Banking Finance Company without
accepting public deposits (Infrastructure Finance Company) with the Reserve
Bank of India. The Company’s principal business is borrowing funds from the
commercial markets to finance the acquisition of new rolling stock which is
then leased to the Indian Railways. IRFC is a consistently profit making Public
Sector Undertaking that has funded rolling stock of book value of Rs.69,843
crore (5,567 locomotives, 33,856 passenger coaches, 14,90,300 freight wagons
and 85 cranes and track machines) for Indian Railways (as on 30.09.2011). Net
worth of IRFC as on 30.09.2011 stood at approximately Rs.4,487.50 crores with
Nil Non-Performing Assets. The Company recorded a net profit after tax of
Rs.485.20 crore for year ended 31.03.2011 compared to Rs. 442.69 crore for year
ended 31.03.2010.