State-run Rail Vikas Nigam Ltd (RVNL), a special purpose vehicle created in 2003 for rail project development and mobilising financial resources, has received regulatory nod for an initial public offering (IPO).
This year so far, 19 companies have received regulatory nods for IPOs in 2018.
RVNL had filed its IPO proposal on 28 March. The government will sell a little more than 208.5 million shares, excluding any shares reserved for employees, resulting in over 10% stake dilution.
The estimated Rs 650 crore ($95 million) IPO is expected to help the government meet its record divestment target of Rs 80,000 crore ($12.5 billion) set for this financial year-end. The proceeds could be deployed to boost rural and infrastructure spending as well as contain the fiscal deficit ahead of general elections next year.
Yes Securities (India), Elara Capital (India) and IDBI Capital Markets & Securities are the merchant bankers for the IPO.
Rail Vikas Nigam
RVNL was incorporated in January 2003 by the railways ministry as a project execution agency to work for and on its behalf.
The company executes all types of railway projects including new lines, gauge conversion, railway electrification, metro rail projects, workshops and major bridges.
Since its inception, the ministry has transferred 172 projects to the company. Of these, 166 projects are sanctioned for execution. Of these, 60 projects have been fully completed and the rest are in progress.
The company had an order book of Rs 68,683.6 crore as on February-end 2018.
As on the end of 2016-17, the company claimed to have completed projects spanning 713.7 route kilometres.
Its key business operations are laying of new rail network lines, doubling of existing routes, gauge conversions, railway electrification, setting up metro lines and suburban networks in metropolitan cities, repair workshops, as well as construction of car sheds, bridges and subways.
RVNL’s major client is the Indian Railways. Other key clients include central and state ministries, departments and public sector undertakings.
The company reported a net profit of Rs 236 crore for the six months ended September 2017 on revenue (from operations) of Rs 3,245 crore for the period.
For 2016-17, the net profit was Rs 443.5 crore on revenue (from operations) of Rs 5,915 crore.