IRFC is funded by equity and debt on liability side. It has rolling stock (RS) and project assets ΒΆ on the asset side primarily. Equity and debt has to be allocated to RS and PA. It can be done in any combination like – 50% of equity funds each. Any combination would result in same profit for the company only geography will change in the PL and BS. For simplicity IRFC has decided to allocated full equity to PA resulting in lower finance costs and % for PA. Capitalisation rate would be more or less close to the following CoB of IRFC * (PA-Equity) divided by PA.
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