Hopeful Rail Vikas Nigam Will Sail Through Without Bailouts, Says Disinvestment Official

PTI, Mar 29, 2019, 11:21 AM IST

Mumbai: Joint secretary at the divestment department NV Reddy Tuesday expressed hope that the forthcoming Rs 481-crore public issue of state-owned Rail Vikas Nigam (RVNL) will garner good response and will not have to be bailed by banks and LIC.

The Miniratna company under the railway ministry is offering up to 2,53,457,280 shares at a price band of Rs 17-19 in an IPO that hits the markets on March 29.

“This IPO is attractively priced and we feel we will be able to attract small investors,” Reddy told reporters.

Asked whether they are is seeking support from LIC and state-runs banks to bailout the IPO in case it does fails to sail through, Reddy said, “we cannot depend on PSUs as their boards take investment decisions independently. We don’t want to depend on any of them beyond a point because it’s their decision to invest and not to invest.”

It can be noted that in FY18, LIC and state-run banks coughed up as much as Rs 25,000 crore in the total divestment proceeds of Rs 1 trillion, he said.

“This year, we have so far achieved Rs 85,000 crore in divestment proceeds and of this, only Rs 5,000 crore have come from LIC, banks and state-run insurers, which is very low
compared to the previous year” Reddy added.

It may be recalled that the government had to extend closing time for the recent Rs 226-crore IPO by state-run MSTC due to poor demand.

RVNL has an order book of over Rs 77,504 crore as of December 2018, which includes 102 ongoing projects. Its revenue from operations has been growing at an annualized 29.36 percent at Rs 7,597.3 crore in the year to March 2018 since FY16, while net profit has been growing at 15.20 percent to Rs 569.9 crore during the same period.

Elara Capital, IDBI Capital Markets and Yes Securities are the lead managers to the offer, while Alankit Assignments is the registrar.