The Hindu Business Line : IRFC to mobilise Rs 500 cr thru bonds issue

The Indian Railway Finance Corporation (IRFC) plans to raise Rs 500 crore through a bond issue over the next few days. It also plans to raise $200 million through external commercial borrowings in January next year.

IRFC, a public sector unit, is the finance mobilisation arm of Indian Railways and raises funds from the market for financing over 50 per cent of rolling stock of Railways. It leases the stock to Indian Railways, which in turn pays lease rentals to IRFC in advance on a half-yearly basis. The lease rentals are fixed at a mark-up of average borrowing costs at the end of every fiscal through an agreement between IRFC and Railways.

In 2005-06, IRFC leased assets worth Rs 3,293 crore to Indian Railways. Till March 2005, on a cumulative basis, IRFC had leased assets valued at Rs 32,086 crore.

The Rs 500-crore bonds would be raised through private placement. "We plan to contact the banks and other organisations that have evinced interest in investing in our bonds next week," Mr R. Kashyap, Managing Director, IRFC, told Business Line. From the record high of Rs 4,170 crore that the organisation is budgeted to raise for Indian Railways this fiscal, the public sector unit has already mobilised Rs 1,260 crore from the domestic market in 2006-07 through bonds and some term loans.

For the Indian Railways, the organisation has made available almost Rs 1,500 crore in the present fiscal till date — as apart from the Rs 1,260-crore market mobilisation, the funds include about Rs 200 crore that IRFC had raised in 2005-06, but carried forward to 2006-07.

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