Is IRFC exposed to a single entity or does it lend to other entities? If so what is the credit quality of its other liwciDiweis?
IRFC primarily lends to the MoR. As at March 31, 2004, it had advanced only about 2% of loans to other entities. Even therein, as a strategy, the compare only lends to entities in which the MoR has a large stake. Thus, it has extended a Rs. 300 million loan to the Pipavav Railway Corporation Limited (PRCL) and a Rs. 1.50 billion loan to Railtel Corporation of India (Railtel). IRFC also raised a loan in 1999 on behalf of the MoF to repay the latter’s outstanding loan from the Exim Bank of Japan. But this was a ore-off transaction. In the near term, IRFC is expected to raise snarket borrowings of around Rs.3 - 4 billion and pass on the same to Rail Vikas Nigam Limited. The underlying exposure on this loan would, however be on the MoR. Overall, CRISIL expects the proportion of IRFC’s railway infrastructure-related project financing business to remain small in comparison to its overall portfolio.
Given the MoR’s strong credit profile, CRISIL does not view IRFC’s high business concentration to be a negative rating factor. But exposure to riskier assets could lead to deterioration in its business profile even if it brings some degree of diversification.