Business Daily from THE HINDU group of publications
Wednesday, Aug 16, 2006
Business Daily from THE HINDU group of publications Wednesday, Aug 16, 2006 |
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Railways Logistics - Disinvestment Rlys may divest Ircon, RITES stake Mamuni Das
Divestment plans Move to raise funds for the proposed dedicated freight corridor project Both PSUs have witnessed double-digit growth in recent years RITES yet to revert to the Railway Ministry on the issue Ircon for partial divestment to raise additional funds for its operations
New Delhi , Aug. 15 The Railway Ministry has sought the views of its public sector units, Ircon International and Rail India Technical and Economic Services (RITES), on a possible offload of Government stake in them. Both the profit making firms are wholly owned by Indian Railways. Sources told Business Line that the Railways could be considering this move to raise funds for the proposed dedicated freight corridor project. While RITES is yet to revert to the Ministry on the issue, Ircon has indicated that it was comfortable with a partial divestment programme, as it also wants to raise additional funds for its operations. RITES is a consulting organisation under the Ministry, while Ircon is the construction arm with expertise in rail track, civil, electronic and signalling construction. Both the firms have witnessed double-digit growth in recent years. RITES is a Mini-Ratna PSU, while Ircon has recently been upgraded as a schedule A company (from schedule B) by the Ministry. The only Railway PSU to have been divested so far is Container Corporation of India (Concor), which was divested in 1998-99. In 2005, the Finance Minister, Mr P. Chidambaram, had named Concor as one of the PSUs where Government would offload additional stake; but not much has moved on the front. Incidentally, in 2002, there was a move to divest RITES and Ircon by the Disinvestment Ministry, which was stalled by the then Railway Minister, Mr Nitish Kumar. The latest Railways move on partial disinvestments in Ircon and RITES came a few weeks ago in the form of a letter to the PSUs. When contacted on the issue, senior Ircon officials told Business Line, "We have written back to the Ministry asking them to consider partial divestment, as the move would help us raise funds for our future projects, especially build-operate-transfer operations."
PSUs' performance
Ircon is largely debt-free, except for a recent debt of Rs 450 crore that it raised through a 50:50 joint venture with Soma Enterprises for a road project in Maharashtra. For the quarter ended June 30, 2006, Ircon has recorded a turnover of Rs 28.9 crore, up 52 per cent from the corresponding quarter last year. The firm's net profit was also up 24 per cent at Rs 17.78 crore for the quarter. RITES, meanwhile, is learnt to be studying the issue and is yet to get back to its parent Ministry, said RITES officials. RITES Ltd, an ISO 9001-2000 company, has consultancy expertise in transport, infrastructure and related technologies. For the quarter ended June 30, 2006, RITES has recorded a net profit of Rs 24.25 crore, up 142 per cent from the corresponding period last year. The firm's turnover was at Rs 125 crore, up 180 per cent.
Divestments on hold
In July, the Prime Minister, Dr Manmohan Singh, had put divestment decisions on hold, with the UPA Government's ally DMK threatening to withdraw from the Government in protest against the move for a partial disinvestment of Neyveli Lignite Corporation.
Related Stories: More Stories on : Railways | Disinvestment | PSU
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