Divestment in rail PSUs not in near future
Divestment in railway public sector undertakings is not likely in the near future.
According to sources, future divestments on railway subsidiaries will depend on a decision by the Union Cabinet on the plan to set up a holding company for all central public sector enterprises under the Suresh Prabhu-led ministry.
The Cabinet is likely to take a call on this decision by the end of this month.
According to sources, the earlier plan for a strategic sale in Container Corporation of India (Concor), which would have led to privatisation of the railway entity, is temporarily on hold due to the current market situation and also for the decision referred to.
“The idea for a strategic sale is in place and we are waiting for the right time,” Railway Board chairman A K Mittal told this newspaper.
In the proposal before the Cabinet, the holding company will have all other entities except Indian Railway Finance Corp. The Railway Board chairman will be chairman and managing director of the mega company.
The government's total disinvestment target for 2016-17 was ~56,500 crore, of which ~36,000 crore was to be through minority stake sale in PSUs and ~20,500 crore from strategic sale. It has for ~34,800 crore from sale of minority stake in this financial year.
Concor is a profit-making entity and the government has 56.79 per cent stake in it. Said an official source, “There are two ideas we are having. One is a strategic sale of 10 per cent, through which the company might lose its PSU tag. The government also has a plan to go for a minority stake sale of five per cent. If market conditions are ideal, the government might think about this.”
Concor had ~787 crore net profit in 2015-16. Early this year, the government divested five per cent stake in Concor at ~1,195 a share, fetching ~1,155 crore.
Divesting stake in unlisted railway public sector behemoths IRCTC, Ircon, RITES, etc, would unlock a lot of potential and be a needed source of revenue for the government. For the proposal to merge rail subsidiaries, the ministry has got responses from other ministries and departments for the Cabinet note it had floated in this regard.