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RITES to tap market

Special Correspondent

Cabinet Committee approves initial public offering

To issue one crore shares of Rs. 10 each at par
Post-issue Govt. holding will reduce to 72 p.c.

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved an initial public offering (IPO) of one crore shares for Rs 10 at par by rail infrastructure company RITES Ltd.

Following the IPO some time during the next financial year, the paid-up equity capital of RITES, a company under the Indian Railways, will rise from Rs 4 crore to Rs 5 crore, according to an official statement here.

With this, the Government’s equity holding in the company will stand reduced from the current 100 per cent to 72 per cent.

In effect, it will mean an indirect disinvestment of the Centre’s holding to the extent of 28 per cent.

Briefing newspersons after the CCEA meeting chaired by Prime Minister Manmohan Singh, Finance Minister P. Chidambaram said: “RITES is entering into emerging businesses of infrastructure projects and needs capital. After the public issue, [the] Government will still be left with 72 per cent equity in the company.”

Mr Chidambaram ruled out the possibility of a public issue by RITES during the current fiscal as the procedure, including appointment of advisers, is to take a minimum of three to four months in normal course.

Rs. 500 cr. networth

Currently, RITES has a networth of over Rs 500 crore.

The face value of the company’s has been split from Rs 100 to Rs 10, while the authorised capital has been raised to Rs 100 crore.

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