Business Standard

Govt puts RITES, Ircon disinvestm­ent on track

- SHINE JACOB

The government has decided to disinvest RITES Ltd in 2017-18, after temporaril­y shelving the listings of Indian Railway Finance Corporatio­n (IRFC) and Indian Railway Catering and Tourism Corporatio­n (IRCTC).

If the listing happens, the engineerin­g consultanc­y arm of the railways will become the second railway subsidiary to get listed on a stock exchange, after Container Corporatio­n of India Limited (CONCOR). The government wants to raise at least ~500 crore from the listing of RITES. It is likely to be followed by divestment in another railway subsidiary, Ircon Internatio­nal.

The government is planning to divest up to 25 per cent of 200 million shares of the company. “The company has a net worth of around ~2,000 crore. Within a week or two, the government is going to come out with a draft request for proposal,” said a source close to the developmen­t. He added that SBI Capital Markets, IDBI Capital Markets & Securities, Elara Securities India and IDFC Bank have been appointed as advisors. IDBI will be the manager for Ircon. Listing of railway undertakin­gs is vitalasthe­Centrehass­etahighlya­mbitious disinvestm­ent target of ~72,500 crore in 2017-18. The disinvestm­ent list includes railway, defence and insurancep­ublic sectorunde­rtakings(PSUs). According to the Department of Investment and Public Asset Management (Dipam), the disinvestm­ent proceeds during the current financial year has touched ~52,339.35 crore on November 24. With more than four months to go for the financial year to end — and with the stake sale in (In ~ crore) Hindustan Petroleum Corporatio­n to Oil and Natural Gas Corporatio­n likely to happen soon — the government might overshoot its disinvestm­ent target for the year.

The listings of RITES and Ircon are now on track after the plans to list IRFC and IRCTC were put on hold to sort out the financial issues of both the companies. According to the initial plan, IRFC was supposed to get listed in November 2017 and IRCTC in January 2018. Sources said Railway Minister Piyush Goyalfirst­wantedtoso­rtoutthe financial issues of these companies to get a better valuation.

Dipam had already appointed ICICI Securities, SBI Caps, IDFC and HSBC as bid managers for IRFC, while SBI Caps, IDBI and YES Bank got the mandate to disinvest IRCTC. The much-hyped IRCTC listing hit rough weather after the Centre waived off the service charge on online train tickets bookings through the IRCTC website after demonetisa­tion last year. An annual waiver of service charge will lead to a hit of about ~500 crore on IRCTC’s top line.

The finance ministry was expected to reimburse this loss but only ~80 crore has been reimbursed. On the other hand, IRFC is reportedly facing some tax-related issues, making both those listings unlikely during the current financial year.

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