Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022503610800.htm

Back IRFC to raise Rs 4,170 cr in 2006-07

Our Bureau

New Delhi , Feb. 24

After a long time, the Indian Railway Finance Corporation (IRFC) is slated to raise substantial monies from the market. The IRFC willbe mobilising Rs 4,170 crore during 2006-07, as against Rs 3,400 crore in the current fiscal.

So far during 2005-06, the corporation has mopped up Rs 2,718 crore from the market for the Railways at an average weighted cost of below 7 per cent for a tenure of 8-9 years. "We are now going to raise $125 million of external commercial borrowings before the middle of March, which will more or less complete the borrowing programme for the fiscal", an IRFC official said.

The cost of funds for IRFC has gone up since 2004-05, when it raised Rs 2,888 crore at a lower weighted average cost of 6.12 per cent after providing for foreign exchange risk and at a weighted average tenure of over seven years. "We have had to pay higher rates because it reflects the general hardening of interest rates, including for the Government", the official added.

To that extent, raising an all-time high amount of Rs 4,170 crore may prove a daunting task, when there is already a severe fund crunch in the money market. 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 Railways. Roughly half of the Railways' rolling stock has been financed through the IRFC route. Till date, these have included 1.12 lakh wagons, 3,227 locos and 21,600 coaches.