Govt kicks off 25% divestment in 5 Railway units with first sale in RVNL

The Centre plans to offload as much as 25-per cent of its stake in the five subsidiary units of the Railways, despite stiff employee opposition to any dilution of stake in entities owned by the national transport network.

The Department of Investment and Public Asset Management (DIPAM) is on the lookout for a registrar to manage a proposed 25 per cent disinvestment in Rail Vikas Nigam Ltd (RVNL) and has invited applications from eligible firms latest by 21 September.

Besides RVNL, the government also approved plans to offload 25 per cent equity each in other Railway subsidiaries, including IRCON International Ltd, Indian Railway Finance Corporation Ltd, Indian Railway Catering and Tourism Corporation Ltd (IRCTC) and RITES Ltd, according to DIPAM officials.

''RVNL is a test case, but 25-per cent stake will be sold in all the five rail PSUs. This will not only ensure better revenues, but also help improve the functioning of the firms and get them more resources,'' said an official, adding that it is also to achieve the Sebi-set minimum public holding norm of 25 per cent for listed companies.

The Cabinet Committee on Economic Affairs (CCEA) had in April, approved plans to list the five rail PSUs through a public offer of up to 25-per cent stake following a Budget announcement. However, the ''actual disinvestment of each CPSE along with the mode of raising resources has been delegated for decision on a case-to-case basis to the Alternative Mechanism''.

At present, the centre holds 100 per cent equity each in the five rail PSUS and is keen to offload stakes in at least RVNL and RITES this fiscal, according to DIPAM officials.

The government plans to raise up to R72,500 crore through sale of stake in state-owned enterprises and Rs46,500 crore from sale of minority stakes in some privately-owned units.

Till now, it has raised Rs9,960.12 crore from divestment in PSUs, including NTPC and the sale of a minority stake in L&T through Specified Undertaking of Unit Trust of India.

DIPAM is expected to soon issue requests for proposal for the remaining rail PSUs as well.

The funds are needed for Railways to complete projects on time and to repay funds raised by IRFC.