Nitin Gadkari had pitched in September last year that NHAI could go to the stock market once it receives the the finance ministry's nod
The National Highways Authority of India's (NHAI) run up to get listed on stock market could gain momentum with the Finance Ministry considering the idea as “sensible”.
“…On the face of it, it (the proposal for IPO) looks sensible,” a senior government official told Moneycontrol.
An Initial Public offer or IPO is a process under which an organisation offers its shares to the public for the first time to be subscribed by them. While NHAI is already listed on stock exchange for issue of bonds, it has never issued shares under its name.
Union minister of road transport and highways, Nitin Gadkari, had pitched in September last year that NHAI could go to stock market to manage its financial needs once it receives nod from the Finance ministry.
The official, however, said that the proposal would go ahead only after NHAI figures out a way to form a company that can be listed on the stock exchange.
“NHAI is a good organisation. If it’s converted into a company, only then you can have an IPO,” he said.
The official added that to fasten the process, NHAI needs to submit its proposal to the finance ministry giving detailed report of how it plans to take things forward.
“Once they send the proposal, we will examine it. On the face of it, we don’t find any problem with it. It’s a profitable organisation and can raise substantial amount,” he said.
Moneycontrol had reported in November last year that NHAI was contemplating formation of four subsidiary companies, each for expressways, highways, international projects and wayside amenities to “reform the board structure” of the organisation.
“It (issue of IPO) cannot happen without a company... These divisions are in line with the IPO,” Deepak Kumar, chairman, NHAI had told Moneycontrol.
NHAI has already set up a separate division for “Highways Operation” dedicated towards their construction and maintenance along with handling electronic tolling, road safety and security, incident management–helpline, tracking of ambulance, cranes on highways, highway traffic management system, wi-fi and other modern amenities on national highways.
The apex body for constructing national highways in the country received BBB- and Baa3 from S&P Global and Moody’s respectively last year and has AAA rating from CRISIL and ICRA rating agencies.
Rating agencies have “stable outlook” towards the organisation, reflecting their “strategic importance to the country”.
These agencies have said in their statements that their rating for NHAI reflects the strong footing of the organisation in the country as they expect the organisation to “receive support from the government in case of distress”.Union Budget for 2018-19 also earmarked Rs 91,663.13 crore as public sector investment NHAI up from Rs 83,170 .59 crore in 2017-18.