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Mamuni Das

The IRFC further plans to raise about $125 million through external commercial borrowings.

New Delhi , Nov. 22

THE Indian Railway Finance Corporation, the resource mobilisation arm of Indian Railways, has raised Rs 2,150 crore till date this fiscal at an average cost of 6.87 per cent over an average tenure of eight years. This reflects a trend of hardening of rates as in 2004-05, it had borrowed Rs 2,888 crore at a weighted average cost of 6.12 per cent.

The IRFC further plans to raise about $125 million through external commercial borrowings. The public sector unit is required to raise Rs 3,400 crore in the current fiscal as per the budgeted estimates.

"The IRFC has already raised Rs 2,150 crore this fiscal out of the targeted Rs 3,400 crore. This is at an average cost of 6.87 per cent," the Indian Railways Financial Commissioner, Mrs Vijayalakshmi Viswanathan, told Business Line.

The amount has been raised from the domestic market through the issuance of taxable bonds and term loans. From the total amount, "Rs 300 crore was raised a few days ago through term loans at about seven per cent rate," an IRFC official told Business Line. The lead managers were mostly nationalised banks, he added.

When questioned on how the IRFC plans to raise the rest of the funds, the official said, "We plan to raise about $125 million through external commercial borrowings. The rest we plan to raise from the domestic market," he said.

Asked when it plans to enter the market, the official said, "We are constantly watching the market. We would enter at an opportune time."

Out of Rs 2,150 crore, Rs 1,300 crore was raised by term loans at a cost of 7.12 per cent and Rs 850 crore through issue of taxable bonds. Between May-July 2005, the IRFC had raised Rs 1,350 crore and the rest was raised subsequently.

Last fiscal (2004-05), the public sector unit had borrowed Rs 2,888 crore, of which offshore borrowings accounted for Rs 1,096 crore and domestic borrowings Rs 1,792 crore. The total borrowings were at a weighted average cost of 6.12 per cent after providing for foreign exchange risk and at a weighted average tenure of over seven years.

The Railways' rolling stock requirements are primarily met through borrowings contracted by the IRFC. The public sector unit uses the funds to acquire locomotives, freight wagons and passenger coaches and leases them out to the former for a 15-year period.

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