IPOs of IRCTC, IRFC may be deferred

The listing of two public sector undertakings under the Railways Ministry — Indian Railway Finance Corporation (IRFC) and Indian Railway Catering and Tourism Corporation (IRCTC) — may get delayed, as the government now wants to sort out the financial issues facing the companies. Officials close to the developments said that new railways minister, Piyush Goyal, wanted to resolve these issues in order to get a better valuation before going for listing.
 
While IRCTC is facing issues related to service-charge waiver, IRFC’s concern is related to deferred-tax liabilities. “The railway minister evaluated the financial difficulties of the companies. Following this, it was decided to go slow on the listing process of all railway subsidiaries,” said an official.
 
According to the government’s plan, its borrowing arm, IRFC, was to get listed in November 2017, while IRCTC in January 2018.
 
These two market debuts, through initial public offerings, were part the Centre’s plans to list a number of railway, defence and insurance public sector units (PSUs), in the backdrop of a highly ambitious disinvestment target of Rs 72,500 crore for 2017-18 (FY18).
 
However, as on September 20, the disinvestment proceeds during the current financial year stand at Rs 19,157.95 crore.
 
Another official aware of the developments said that as the promoter and majority owner of the PSUs, it was the government's job to ensure that it got the best valuation for the units. “We will examine and sort out any issue that affects the valuation and investor interest for these firms,” said the person.
 

“In the case of IRCTC, it is the service-charge issue, and in IRFC's case, it is about deferred-tax liabilities. The Centre is looking to resolve these issues before the IPOs happen,” the official said, but also added that the two market debuts were on track and would happen in accordance with an ‘internally-decided timeline’.
 
The Department of Investment and Public Asset Management has already appointed ICICI Securities, SBI Caps, IDFC, and HSBC bid managers for IRFC, while SBI Caps, IDBI, and Yes Bank will be in charge of taking IRCTC to the bourses.
 
IRCTC’s listing plan was under a cloud, as the Centre has waived the service charge on online ticket bookings through the IRCTC website.
 
This was initiated to boost digital transactions after the note ban in November last year. An annual waiver of the service charge would shave off Rs 500 crore from IRCTC’s revenue kitty. Though the finance ministry was expected to reimburse this, only Rs 80 crore has come so far.

During FY16, IRFC had posted a profit before tax of Rs 1,949 crore as against Rs 1,941 crore in FY15. Since its inception till the end of March 2016, IRFC has funded acquisitions of 8,390 locomotives, 45,545 passenger coaches, and 204,456 freight wagons, valued at Rs 1,37,038 crore. In addition, IRFC provided Rs 3,575 crore as support to other railway entities such as Rail Vikas Nigam Ltd and RailTel Corporation of India. It has also funded select capacity-enhancement works of Rs 2,078 crore.