Rail infra to get boost as RITES IPO to hit market
New Delhi: In a major move aimed at giving a boost to infrastructure development of Indian Railways, the government is set to disinvest 12 per cent of its share through IPO (Initial Public Offer) in the RITES, a Mini Ratna PSU of the Railway Ministry.
Apart from the 12 per cent stake, which is on offer, the government will disinvest another 0.6 per cent of its share which will be given to the employees of the RITES (Rail India Technical and Economic Services Ltd). The total stake that government will own after disinvestment of 12.6 per cent stake is about 87.4 per cent.
With the RITES coming with its IPO, the Mini Ratna PSU will become the first PSU of Railways Ministry to offer its shares to the public through investors. The autonomous body is looking for investors from other resources including the insurance companies.
As per officials in Railways Ministry, the listing of the stakes would help in speeding up projects like freight corridors, high-speed rail corridors, station development and upgradation of rail tracks to bear with the speed of over 150 km/h.
"Disinvestment of shares through IPO doesn't mean that there is any fund crunch. The financial health of RITES is very healthy as the PSU which had its revenue worth of Rs Rs 566 crore in 2007-08 has now grown to about Rs 1600 crore (last fiscal), which is almost three times," said RITES Chairman and Managing Director Rajeev Mehrotra while talking to Millennium Post.
"The listing will help in generating funds for the infrastructural development of railways. It will help in reaching out to a wider range of investors who would invest after thoroughly reviewing our performance. The most sought-after feature of this IPO is that its open for even retain investors too, which means investors with small funds would also get associated with railways," Mehrotra said.
RITES provides consultation in transportation, multimodal, city planning, railways, shipping, water management, designing, and operating stations, among other things. While the IPO is slated for the third week of this month, the company is expected to list by the first week of July. The IPO is part of government's strategic disinvestment plan as the company has enough funds for its immediate capital expenditure.
RITES, which one amongst the 11 PSUs of national transporter, has a paid-up equity of Rs 200 crore, the net worth of Rs 2,100 crore, and cash reserves of over Rs 1,400 crore, of which working capital requirement is about Rs 500 crore.