The Centre has commenced the process of disinvestment in public sector enterprises of Indian Railways — IRCON International, IRFC and IRCTC — with the announcement for expression of interest to appoint merchant bankers for the initial public offer (IPO) of IRCON International.

The move follows the Budget announcement by Finance Minister Arun Jaitley, who in his budget speech said, “The shares of Railway PSEs, such as IRCTC, IRFC and IRCON, will be listed in stock exchanges.”

This is a part of the disinvestment process of which the government has budgeted a total realisation of ₹72,500 crore for fiscal FY18. Of this, disinvestment receipts constitute ₹46,500 crore, strategic disinvestment ₹15,000 crore and listing of insurance companies ₹11,000 crore.

IRCON International is a wholly-owned government company in the business of executing projects for the last four decades in the areas of Railways, railway electrification, signal and telecommunication, construction of roads, highways, commercial, industrial and residential complexes, airport runways, airport construction, leasing of locomotives, and mass rapid transit systems, among others.

The company has completed 300 infrastructure projects in India and 100 across the globe in 21 countries, including Algeria, Angola, Bangladesh, Indonesia, Iran, Iraq, Israel, Italy, Saudi Arabia and United Kingdom. It had an operating income of ₹2,403 crore and a net profit of ₹379 crore in FY16.

The disinvestment target set by the government is higher than what was realised in FY16 and the revised estimate for FY17. For FY16, the government raked in ₹42,131.69 crore while the revised estimate for FY17 is ₹45,500 crore (₹11,000 crore lower than the Budget estimate of ₹56,500 crore for FY17).

For each public issue (IPO/FPO), the first step is the appointment of merchant bankers. Post this the bankers advise the government/PSU on the timing and modalities of the issue so as to ensure optimum return.

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