India Infrastructure Finance Company Ltd (IIFCL) plans to move its overseas base from London to Amsterdam to take advantage of the favourable tax regime.
Resources can be raised as efficiently in the financial and business capital of Netherlands as in London. Moreover, the outgo on account of taxation on resources raised and income earned will be less, according to Mr S. K. Goel, Chairman and Managing Director, IIFCL.
The non-banking finance company, which is categorised as an infrastructure finance company, will move its overseas operations to Amsterdam next month.
IIFCL’s UK subsidiary’s cumulative disbursements, including letter of comfort, to 12 infrastructure projects – in power, metro rail, ports, gas pipeline and fertiliser manufacturing – in India since inception in 2008 aggregated $740 million as at March 2012.
Cumulatively, IIFC (UK) Ltd has extended sanctions to 36 infrastructure projects aggregating $3.905 billion.
Lending by IIFC (UK) Ltd is exclusively meant for financing import of capital equipment and machinery by infrastructure projects in India. IIFCL’s overseas arm provides long term foreign currency loans to Indian companies setting up infrastructure projects in India.
Tax-free bonds
Though IIFCL can raise Rs 10,000 crore by issuing tax-free bonds in 2012-13 for financing major infrastructure sectors, it will raise only about a third of the amount as it has sufficient funds. It did not raise funds through tax-free bonds last year.
“We will wait for interest rates to come off a little before tapping the market with tax-free bonds,” said Mr Goel.
FY12 performance
IIFCL, a wholly-owned Government of India enterprise, reported a 98 per cent increase in net profit at Rs 586 crore in the year ended March 31, 2012, against Rs 296 crore in the corresponding period last year.
In 2011-12, loan disbursements, including direct lending, refinance and takeout finance to road, power, port and railway projects, increased by Rs 5052 crore. As at March-end 2012, cumulative disbursements stood at Rs 20,377 crore.