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Showing posts with label LIC in Railways. Show all posts
Showing posts with label LIC in Railways. Show all posts

Tuesday, 27 October 2015

07:12

LIC to buy corporate bonds worth Rs 2,000-cr from Indian Railways

LIC to buy corporate bonds worth Rs 2,000-cr from Indian Railways 

MUMBAI: India's largest insurer and national transporter are set to kick off their funding journey with a bilateral bond deal. 

LIC would subscribe to about Rs 2,000 crore worth of corporate bonds from the Indian Railways this week in what's the beginning of a Rs 1.5 lakh crore investment deal over the next five years. These 30-year maturity bonds are likely to yield 30 basis points more than the government benchmark bond, said three people familiar with the matter. 

"While the insurer would benefit in terms of credit quality, the funding will help the railways carry out long-term projects," one of the executives cited above told ET, adding that the deal would be announced in a day or two. Going by the average benchmark in the past few weeks, such bonds may yield anything between 8.75 and 8.85%. 

The bond deal is seen more of a loan at a concessional rate, the permission for which has been taken from the Reserve Bank of India. Indian Railway Finance Corp (IRFC), which is the financing arm of the Indian Railways, is likely to offer Rs 17,200 crore worth of such bonds to LIC this financial year. Funds would be channelised by the railways for capacity expansion and longterm projects. 

The ministry also intends to fasttrack sanctioned works on 7,000 km of double/third/fourth lines and commission 1,200 km in 2015-16 at an investment of Rs 8,686 crore. 

Long-term funds are essential to revamp the ailing network as banks alone cannot meet such huge requirements. Other pledges that need to be met include bullet trains and air-conditioned local trains for Mumbai. 

IRFC, a government-owned triple-A rated entity, is also likely to float tax-free bonds for a few thousand rupees even as the institution is discussing with investment bankers ways to sell rupee-denominated offshore bonds. "Ensuring a pipeline of investments is the only way the railways can create new capacities and bring in the necessary upgradation," Deepak Parekh, chairman of HDFC, had written. 

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Friday, 25 September 2015

07:32

Suresh Prabhu’s plans to put IR back on track yet to gain Speed

Suresh Prabhu’s plans to put IR back on track yet to gain Speed

Going by the stagnant spends on core capex in the five months to August, however, railway minister Suresh Prabhu’s plans to put Indian Railways back on track don’t seem to have gathered speed just yet

New Delhi: Armed with Rs 1,50,000 crore from Life Insurance Corporation (LIC) and lots of room to raise money through bonds, one was expecting Suresh Prabhu to ramp up the pace of capex. After all, it’s the roads and railways sectors that are supposed to be driving expenditure to kickstart the economy. Going by the stagnant spends on core capex in the five months to August, however, the railway minister’s plans to put Indian Railways back on track don’t seem to have gathered speed just yet.

Check out the capex that’s done directly by Indian Railways – electrification, doubling, conversion of gauges and so on – and it hasn’t budged. Numbers crunched by Ambit Capital show that at Rs 14,700 crore, the growth rate is zero%. To be sure some of it could be work-in-progress and it’s possible the trend could reverse in a few months time, but it’s surprising spends on rolling stock are down 60% year-on-year while those on track renewals are down 24%y-o-y. Some of this has been offset with higher spends on other areas – for instance, more new lines are being built and more of them electrified.

Also, the minister had, in a recent presentation, indicated there would be a focus on doubling – badly needed on routes such as Delhi-Kolkata – electrification; but even though the spends on doubling are up 62% y-o-y, it’s shade below the required run rate.

But total spends are going up – 12% y-o-y to Rs 21,300 crore – with much of this channeled into joint ventures and SPVs of Northern Railways. That investment will no doubt bear fruit too but in the meantime Indian Railways needs to launch some big projects. In this context, CMIE’s assessment that there haven’t been too many announcements for large projects in the last 12 months, except for the Delhi-Chennai high-speed venture and a couple of others, isn’t encouraging.

The other piece of bad news is that although revenues have risen 10% y-o-y,so far this year they’re about 8% below target.

This is one reason the operating ratio of 92.6% has stayed above the targetted 88.5% for the first five months. To be sure there’s no reason this can’t get better in the coming months if revenues pick up but there is a slowdown in the economy and even in good times the OR has not fallen below 90%.

As Ambit’s Nitin Bhasin points out while the long-term strategy for Indian Railways is well thought out with room for private sector participation, there is concern on the capacity of the ecosystem to award and execute $16 bn in the current year and $30 billion annually for the next four years thereafter. The sooner Indian Railways is able to rope in the private sector the better because it’s not going to be easy to try and do 500-600 kms of doubling every year through the railway PSUs or even electrify 2,000 kms a year. It must also get going on switching to commercial accounting; that will give the team a good idea of the returns on the investment and help it fob off political pressure for unviable projects.
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Wednesday, 11 March 2015

20:59

Life Insurance Corporation Signed MOU with Railways

Highest Ever Funding of Rs. 1.5 Lakh Crore for Railways – MoU Signed with LIC 

A Big Step Forward to make Indian Economy more Robust: Suresh Prabhu 

Just within fifteen days of presenting the Railway Budget 2015-16, the Minister of Railways Shri Suresh Prabhakar Prabhu fulfilled yet another commitment of his Budget announcement by achieving the highest ever funding of Rs. 1.5 lakh crore for Railways. In this historic landmark achievement, a Memorandum of Understanding (MoU) was signed between the Ministry of Railways and Life Insurance Corporation (LIC) in the presence of the Minister of Finance Shri Arun Jaitley and the Minister of Railways Shri Suresh Prabhakar Prabhu at a function here today. The signatories of MoU were Smt. Rajalakshmi Ravikumar, Financial Commissioner, Ministry of Railways and Shri S.K.Roy, Chairman, LIC. 

Speaking on the occasion, the Railway Minister said that this is the first such step in its endeavour to make Indian Railways prosperous in the future. He said that with such encouraging initiatives, the Ministry of Railways will be able to augment its resources for speedier execution of projects. Shri Suresh Prabhu said that the resultant enhanced throughput of traffic is likely to further increase the capacity to carry more to meet with a growing transportation demand leading to a robust economy. He thanked the officials of the Finance Ministry, LIC and the Railway Ministry for working together as a team to make this deal a big success. 

Under this MoU, LIC will make available to the Ministry of Railways/its entities a Financial Assistance with a limit of 1,50,000 crore over the next five years for implementing Railway projects. The Financial Assistance will be available from the Financial Year 2015-16. In his Budget Speech, Shri Suresh Prabhu had announced his intention of meeting a part of the total Plan Budget of Rs 1,00,011 crore for the financial year 2015-16, through extra budgetary resources, such as market borrowings by tapping low cost long term funds. The challenge has been successfully met in a substantial measure by the signing of this MoU for mobilising resources. 

There would be a five-year moratorium on interest and loan repayment and the rest of the terms would be negotiated while signing the finance assistance agreement. 

The Minister of State for Finance, Shri Jayant Sinha, the Minister of Railways, Shri Manoj Sinha were also present on the occasion. Also present on the occasion, among others, were Shri A.K.Mital, Chairman, Railway Board, Shri Hasmukh Adhia, Secretary (FS), Railway Board Members and senior officials from Ministry of Finance, Ministry of Railways and LIC. 

Earlier, just a few days after the presentation of Railway Budget 2015-16, the Minister of Railways Shri Suresh Prabhakar Prabhu fulfilled commitment of his budget announcement by launching a ‘Customer Complaint Web Portal and Mobile Application’. This ‘Customer Complaint-cum-Suggestion’ portal and mobile App which can be freely downloaded, is very useful as one can track the status of the complaints which he or she registered on this portal with the help of mobile App. Soon after his taking over as the Minister of Railway,, Shri Suresh Prabhu started the process of welcoming suggestions from the people to further improve the passenger services and valuable suggestions on this newly launched portal can be incorporated in all possible ways, if found suitable. 

Source : PIB
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