RITES, which has diversified into turnkey projects, finds them safe as the company works on a cost-plus model, RITES CMD Rajeev Mehrotra said at an IPO-related conference here on Monday. The initial public offering (IPO) is slated to open on June 20.

RITES, which gets its revenue mainly from consulting, has also diversified into different transport areas within consulting, apart from getting into turnkey railway projects, leasing, and exports.

Focus areas

The company has invested in rail links and railway electrification.

Turnkey railway projects account for 29 per cent of the company’s order book; consulting accounts for 53 per cent.

“After consulting business, we focussed on areas where we could understand and sustain, such as turnkey, export, and leasing,” said Mehrotra.

“The risk in any business is of the client not paying, and we generally don’t face that issue as our clients are largely government departments, or public sector units or foreign governments,” he added. It is the preferred consultancy organisation for the Ministries of Railway, Health, Defence and External Affairs.

IPO issue

The company has been largely debt-free with the exception of Railway Electrical Management Company Ltd, a joint venture it has with the Ministry of Railways, whose mandate is to procure power for the Railways. It expects this segment to growth with the freight corridor and high-speed rail links on the anvil.

The IPO is of 25.2 million equity shares, including an employee portion of 1.2 million shares, with a price band of ₹180-185 per equity share. Retail and employees get a discount of ₹6 a share.

On investment in Indian Railway Station Development Corporation (IRSDC) of up to 25 per cent, the DRHP states that the company’s board has given an in-principle approval for the same.

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