Government to sell up to 25% in RailTel

Last Updated: Tue, May 21, 2019 12:43 hrs
RailTel (Image Courtesy: Wikipedia)

New Delhi: The government is looking at listing Railtel, the telecom arm of the Indian Railways, on the bourses by September to off-load up to 25 per cent of its stake and has invited merchant bankers to join it by the second week of next month to take the process forward.

"The Government of India is considering to divest up to 25 per cent paid-up equity share capital in RailTel out of its 100 per cent in the domestic market through initial public offer (IPO)," the Department of Investment and Public Asset Management (DIPAM) said, while inviting bids from merchant bankers.

The invitation for bids does not mention when the likely listing would take place. Official sources said all the railway subsidiaries, whether IPO or OFS issues, will be targeted to be completed by December.

The government last month raised Rs 476 crore by selling 12 per cent stake in Rail Vikas Nigam Ltd (RVNL) through an IPO and is also launching an OFS for RITES as well to divest 15 per cent stake.

In current fiscal, the DIPAM is also planning to launch IPOs of two other rail CPSEs - the Indian Railway Catering and Tourism Corp (IRCTC) and the Indian Railway Finance Corp (IRFC).

The Railway Ministry owns 100 per cent shares of the RailTel Corporation of India, which provides broadband telecom and multimedia network across the country. The company's authorised share capital is Rs 1,000 crore as on date.

Presently, the entire paid-up share capital of Rs 320.93 crore is fully subscribed by the Railways Ministry. Railtel's profit after tax for the fiscal 2017-18 was Rs 156 crore. As on March 31, 2018, it has a net worth of Rs 1,249 crore.

The government has invited bids from bankers by June 11. The listing would entail disinvestment of a portion of paid-up equity of RailTel through a prospectus-based 'Initial Public Offer' (IPO) in the domestic market.

The government has a target to raise Rs 90,000 crore through PSU divestment in the current fiscal, compared to Rs 84,972 crore raised in 2018-19.

The Finance Ministry has lined up 10 CPSEs, including THDCIL, RailTel and TCIL for IPOs and also to launch sector-specific ETFs to meet the ambitious Rs 90,000 crore disinvestment target for 2019-20. So far, it has raised Rs 2,350 crore.