Informist, Monday, Sep 2, 2024
--IREDA head:Discussion with govt on stake dilution in advanced stage
--IREDA head: Have requested govt to dilute up to 10% stake in co
By Sagar Sen and Kshipra Petkar
MUMBAI – The Indian Renewable Energy Development Agency expects to be included in the list of companies that can raise funds through bonds covered under 54EC of the Income Tax Act within a month or so, Pradip Kumar Das, chairman and managing director, said here today. "We are already in talks with the government and we expect the decision to be taken within a month," Das told Informist.
As per the Income Tax Act, investors making capital gains on the sale of immovable property can invest in 54EC bonds to save on long-term capital gains tax. These are special bonds issued by infrastructure companies like REC Ltd, Power Finance Corp Ltd, National Highways Authority of India, and Indian Railway Finance Corp Ltd.
"Housing and Urban Development Corp Ltd is another company which may get this status," Das said at the 'Financing 3.0 Summit' by the Confederation of Indian Industry. He, however, said the quantum of funds to be raised from this instrument is yet to be decided.
"We have increased our presence across the country, which is not the case for a lot of other companies which are getting money from this source. Going ahead we will increase our presence even more," Das said.
Though the bonds offer a lower rate of interest at 5.25%, investors benefit from the tax exemption enjoyed by these instruments. Investors can invest up to 5 mln rupees in a financial year in these bonds, which have a lock-in period of five years.
S&P Global Ratings has assigned 'BBB-' long-term and 'A-3' short-term issuer credit rating to IREDA, with 'stable' outlook. This rating will enable IREDA to expand its reach in the international market, tapping into attractive sources of funding and supporting its borrowing plan.
"(We) need to maintain the rating. As important it is to get the rating, it is even more important to sustain the rating. So we're going about it very responsibly. Wherever we can get cheap money from overseas, we will tap it. All development finance institutions and multilateral organisations have been associated with us since 1997 but, we haven't borrowed from them because the landed cost is high," he said.
On their operations in the GIFT City, Das said they have not got permission to commence operations yet. "It is still under process, when we get it, we will raise funds through it. We're aiming to complete this in 2-3 months. We will issue all sorts of bonds, we have to decide because we have just received the ratings. And also approach all sorts of sustainable and green financing funds."
Now that the company has got sovereign rating, Das said that they will be tapping the overseas market to further bring down the borrowing cost. "Once GIFT City is in operation, we can enable overseas funding through that office so that the developer gets a reduction of at least 3-4% in that overseas funding which is a big amount," he said.
Das said the company plans to borrow around 250 bln rupees from debt market and around 45 bln rupees through equity in 2024-25 (Apr-Mar). He also said that they have requested the government to dilute its stake by up to 10%.
"First, we are seeking the government of India's approval for allowing natural dilution of their stake down by up to 10%. The government will take a final call on that, but we are confident because the kind of equity requirement we need and what the sector expects from us, we have initially estimated 45 bln rupees by Jan-Feb in order to ensure that we have a fair amount of loan book as well as CRAR (capital adequacy ratio) which is very important."
Currently, the company's capital adequacy ratio is around 20% and he said they need to ensure a capital adequacy ratio of 17-18% in order to have a healthy, stable 'AAA' rating in the time to come. "The process is in advanced stages, so maybe within a couple of weeks we will get the final news on that," he said.
On the National Stock Exchange, shares of IREDA closed 1.1% lower at 238.93 rupees. End
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Informist, Monday, Sep 2, 2024
--IREDA head:Discussion with govt on stake dilution in advanced stage
--IREDA head: Have requested govt to dilute up to 10% stake in co
By Sagar Sen and Kshipra Petkar
MUMBAI – The Indian Renewable Energy Development Agency expects to be included in the list of companies that can raise funds through bonds covered under 54EC of the Income Tax Act within a month or so, Pradip Kumar Das, chairman and managing director, said here today. "We are already in talks with the government and we expect the decision to be taken within a month," Das told Informist.
As per the Income Tax Act, investors making capital gains on the sale of immovable property can invest in 54EC bonds to save on long-term capital gains tax. These are special bonds issued by infrastructure companies like REC Ltd, Power Finance Corp Ltd, National Highways Authority of India, and Indian Railway Finance Corp Ltd.
"Housing and Urban Development Corp Ltd is another company which may get this status," Das said at the 'Financing 3.0 Summit' by the Confederation of Indian Industry. He, however, said the quantum of funds to be raised from this instrument is yet to be decided.
"We have increased our presence across the country, which is not the case for a lot of other companies which are getting money from this source. Going ahead we will increase our presence even more," Das said.
Though the bonds offer a lower rate of interest at 5.25%, investors benefit from the tax exemption enjoyed by these instruments. Investors can invest up to 5 mln rupees in a financial year in these bonds, which have a lock-in period of five years.
S&P Global Ratings has assigned 'BBB-' long-term and 'A-3' short-term issuer credit rating to IREDA, with 'stable' outlook. This rating will enable IREDA to expand its reach in the international market, tapping into attractive sources of funding and supporting its borrowing plan.
"(We) need to maintain the rating. As important it is to get the rating, it is even more important to sustain the rating. So we're going about it very responsibly. Wherever we can get cheap money from overseas, we will tap it. All development finance institutions and multilateral organisations have been associated with us since 1997 but, we haven't borrowed from them because the landed cost is high," he said.
On their operations in the GIFT City, Das said they have not got permission to commence operations yet. "It is still under process, when we get it, we will raise funds through it. We're aiming to complete this in 2-3 months. We will issue all sorts of bonds, we have to decide because we have just received the ratings. And also approach all sorts of sustainable and green financing funds."
Now that the company has got sovereign rating, Das said that they will be tapping the overseas market to further bring down the borrowing cost. "Once GIFT City is in operation, we can enable overseas funding through that office so that the developer gets a reduction of at least 3-4% in that overseas funding which is a big amount," he said.
Das said the company plans to borrow around 250 bln rupees from debt market and around 45 bln rupees through equity in 2024-25 (Apr-Mar). He also said that they have requested the government to dilute its stake by up to 10%.
"First, we are seeking the government of India's approval for allowing natural dilution of their stake down by up to 10%. The government will take a final call on that, but we are confident because the kind of equity requirement we need and what the sector expects from us, we have initially estimated 45 bln rupees by Jan-Feb in order to ensure that we have a fair amount of loan book as well as CRAR (capital adequacy ratio) which is very important."
Currently, the company's capital adequacy ratio is around 20% and he said they need to ensure a capital adequacy ratio of 17-18% in order to have a healthy, stable 'AAA' rating in the time to come. "The process is in advanced stages, so maybe within a couple of weeks we will get the final news on that," he said.
On the National Stock Exchange, shares of IREDA closed 1.1% lower at 238.93 rupees. End
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.