Indian Railway Finance Corporation (IRFC), a dedicated financing arm of the Railways Ministry, is set to raise ₹8,000 crore in the January-March quarter of the current fiscal. It also has the Reserve Bank of India’s approval for raising $500 million (around ₹3,140 crore today) through external commercial borrowings (ECB).
But it is not yet clear whether IRFC will use the ECB route, as the company has not finalised the exact timing and specific instruments that it will use to raise funds. It usually raises funds through bonds and loans.
Lower interest ratesIn the current fiscal, IRFC has not accessed the market yet. “Interest rates have softened since April by 80-100 basis points and have also softened in the external market by 0.5-0.6 per cent, which translates into a large benefit spread over the long term,” said a source.
The company has already handed over ₹4,000 crore in the current fiscal to the Railways, from internal accruals and funds raised last fiscal that were not disbursed, official sources told BusinessLine . The funds will be used to acquire locomotives, wagons and coaches.
IRFC aims to raise ₹11,790 crore for the current fiscal, of which ₹290 crore will go towards bankable projects of Rail Vikas Nigam Ltd. During 2013-14, it had funded acquisition of 635 locomotives, 2,861 passenger coaches, and 8,323 freight cars valued at ₹14,784.51 crore. On a cumulative basis, IRFC has funded 7,289 locomotives, 41,432 passenger coaches and 1,85,362 freight cars, which are valued at ₹1,12,266 crore. In 2013-14, the Indian Railways had mobilised ₹14,740 crore for buying rolling stock assets and another ₹440 crore for Rail Vikas Nigam. The funds were mobilised at a weighted average cost of 7.89 per cent. In the current fiscal, the borrowings were scaled down.