Financial Daily from THE HINDU group of publications
Friday, Oct 08, 2004
Financial Daily from THE HINDU group of publications Friday, Oct 08, 2004 |
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Logistics
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Railways IRFC confident of raising Rs 3,400 cr Mamuni Das
New Delhi , Oct. 7 THE Indian Railway Finance Corporation (IRFC) does not foresee any major difficulty in completing its budgeted Rs 3,400 crore borrowings for the current fiscal, despite signs of liquidity tightening on account of inflationary pressures fed by soaring global crude prices and increased credit offtake. According to the Managing Director of IRFC, Mr S. Balachandran, the corporation has already raised about Rs 1,500 crore of its total borrowings target, with these being entirely mopped from the domestic market. "We have raised these sums at fairly competitive rates of well below 7 per cent. About 50 per cent of this has been mobilised at 10-15 years tenor and the remaining within the 5-10 year bucket," he told Business Line. The Indian Railways' resources raising arm is now in the process of raising another $100 million or so through a five-year syndicated foreign currency loan, which is expected to be completed by the month-end. During 2003-04, IRFC mobilised Rs 2,735.27 crore of borrowings, which included Rs 1,570 crore through taxable bonds, Rs 50 crore from tax-free bonds and Rs 684.84 crore of domestic term loans. The remaining amount comprised a foreign currency loan of $80 million (Rs 357.22 crore) and another $16 million (Rs 73.21 crore) in the form of export credit from EDC/Canada for procurement of spare parts. The average cost of its borrowings for the year was just 5.59 per cent, with a weighted average tenor of nearly eight years. Compared to this, the average cost of its Rs 2,775.39 crore worth of incremental borrowings during 2002-03 stood at 6.88 per cent. The real beneficiary of the lower cost of raising resources was the Indian Railways, which had to pay the IRFC lease charges of only Rs 50.10 per thousand per half-year (PTPH) during 2003-04 compared to Rs 54 PTPH in 2002-03. If one considers the impact of the soft interest rate regime over a longer period, the lease charges for the Railways have come down by around 43 per cent from Rs 87.50 PTPH in 1996-97 to Rs 50.10 PTPH last year. The reduction in the cumulative cost of servicing the IRFC for the Railways has been from almost 15 per cent in 1996-97 to 6.2 per cent in 2003-04. But with interest rates on Government borrowings firming up by around 100 basis points in the last 5-6 months alone, there are fears that there would be a spillover effect on the cost of funds raised by quasi-governmental entities such as IRFC as well. The IRFC uses the monies raised by it mainly to acquire rolling stock that it leases out to the Railways for a primary 15-year tenor. For the Railways, higher cost of IRFC borrowings, therefore, translates into higher lease charges. IRFC borrowings have, as on March 31, 2004, helped finance acquisition of 2,813 locomotives, 18,021 passenger coaches and 1,04,444 freight wagons valued at Rs 27,159.13 crore. These account for roughly half of the Railways' rolling stock infrastructure.
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