Taking advantage of the new marginal cost of funds-based lending rate (MCLR) regime, Maharashtra State Road Development Corporation (MSRDC) has repaid high-cost loans of R257 crore that it owed to a clutch of public sector banks and to the Mumbai Metropolitan Region Development Authority (MMRDA).
The state-owned roads development corporation has now borrowed R220 crore at a rate of 8.4% under the new regime, down from an average rate of 12% earlier. MSRDC’s joint managing director told FE the savings to MSRDC on account of the migration is R1.17 lakh per day, which translates to R35 lakh per month, or R4.21 crore annually. “While this does not make a big difference to the overall balance sheet of MSRDC, it has certainly helped to totally ease out our daily expenses, consultants’ fees for the big projects we are undertaking, as well as administrative and employee expenses,” Kurundkar said.
As per the latest audited accounts of MSRDC, the corporation’s total income stood at R701 crore in 2014-15. Expenses stood at R816 crore and the net loss for the year was R112 crore. MSRDC’s total debt stands at R1,250 crore.
The MCLR regime, which came into force in April 2016, requires banks to determine interest rates based primarily on their incremental cost of funds. Since banks review their MCLR on a monthly basis, it is supposed to be a more effective and transparent means of monetary policy transmission than the older base rate system.
MSRDC is currently looking for investors to finance the state’s showpiece project — the Nagpur-Mumbai super communication expressway. The corporation has mandated SBI Caps to arrange for funds to the tune of R27,000 crore out of the total project cost of R46,000 crore. The Asian Development Bank may fund just over R10,000 crore.