The first-of-its-kind deal between logistics firm Arshiya International and rail wagon lease financer, GATX of the US, for leasing of 10 container rakes, is likely to flag off a new trend in the container rail industry.
This has opened a new financing window for Indian private container rail operators.
These operators are now gearing up to take the lease route for rail acquisitions to save on capital costs and interest rates, as the domestic credit market tightens.
Rail lease financiers
GATX, one of the world's largest rail lease financers, is the first foreign entity to get registered under the Indian Railways Wagon Leasing Scheme and provide lease financing of wagons to container rail operators.
Founded in 1898 and listed in NYSE since 1916, GATX today has over 1.64 lakh trains leased out across North America and Europe.
It has been trying to get a foothold in India since 2008.
According to the deal announced recently, GATX will procure the 10 rakes, each having 45 flat box wagons, from India for about Rs 130 crore and lease them out to Arshiya for 10 years for a fixed lease amount.
When contacted, Mr Nijay N. Nair, Arshiya's Head (Strategic Initiatives), did not disclose the lease amount, but indicated that it is significantly less than what interest it had to pay for borrowing Rs 130 crore in India.
Interest rate
This is because GATX raised the capital in the US at the prevailing interest rate there of about two per cent.
“Surely, we will not be charged at 13 per cent (the interest rate in India). So we are also getting the advantage of interest rate difference,” Mr Nair said.
Such deals will also bring new wagon designs and technology into India.
For, GATX has been permitted to incorporate its designs and technology for its future orders for trains from Indian wagon manufacturers.