State-owned miniratna company Rail Vikas Nigam is set to launch its initial public offering for subscription on March 29.
The dilution of stake by the Ministry of Railways is part of the divestment target set by the government every year. The government has already surpassed its FY19 divestment target of Rs 80,000 crore.
Yes Securities (India), Elara Capital (India) and IDBI Capital Markets & Securities are the book running lead managers for the issue, while Alankit Assignments is the registrar to the issue.
Equity shares after the issue are proposed to be listed on BSE and National Stock Exchange of India.
Here are 10 things you should know before subscribing the issue:
Rail Vikas Nigam (RVNL) is a wholly-owned government company, was incorporated with the objective to undertake rail project development, mobilisation of financial resources and implementation of rail projects pertaining to strengthening of golden quadrilateral and port connectivity and raising of extra-budgetary resources for project execution.
However, in 2004, the Ministry of Railways decided that company should restrict itself to project execution. The role of RVNL for mobilisation of finances is restricted to forming of project specific SPVs with private participation.
RVNL is in the business of executing all types of railway projects including new lines, doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges, construction of cable stayed bridges, institution buildings etc.
Public Issue Details
Rail Vikas Nigam after consultation with book running lead managers fixed the price band at Rs 17-19 per share for issue which will close on April 3.
The public issue comprises an offer for sale of up to 25,34,57,280 equity shares by the Government of India, which includes a reservation of 6,57,280 equity shares for eligible employees. The net public offering stands up to 25,28,00,000 shares.
Out of total issue, 50 percent of the net offer will be available for allocation on a proportionate basis to qualified institutional buyers, 5 percent of the QIB portion will be reserved for mutual funds only.
Further, not less than 15 percent of the net offer will be available for non institutional bidders and not less than 35 percent of the offer for retail individual bidders.
The offer would constitute 12.16 percent of the post offer paid-up equity share capital of the company.
Bid Lot and Discount on Offer Price
Minimum bid lot is 780 equity shares and in multiples of 780 equity shares thereafter.
A discount of 50 paise per share on the final offer price will be offered to retail investors and eligible employees.
Funds to Raise
The government will raise Rs 430.88 crore at Rs 17 per share, the lower end of price band and Rs 481.57 crore at Rs 19 per share, the higher price band.
Objectives of the issue
The company will not receive any proceeds from the offer and all proceeds will go to the selling shareholder, the government of India.
RVNL's revenue from operations has increased at a CAGR of 29.36 percent from Rs 4,539.85 crore in the financial year 2016 to Rs 7,597.36 crore in the financial year 2018, and net profit has increased at a CAGR of 15.20 percent from Rs 429.43 crore in FY16 to Rs 569.92 crore in FY18.
RVNL has an order book of Rs 77,504.28 crore as on December 31, 2018 which includes 102 ongoing projects.
During the financial year ending March 31, 2018, RVNL has completed a total of 885.50 rkm of project length which included 315.20 rkm of doubling and 425 rkm of railway electrification.
Since its inception in 2003, Ministry of Railways has transferred 179 projects to RVNL of which 174 projects are sanctioned for execution. Out of these, 72 projects have been fully completed totalling to Rs 20,567.28 crore and the balance are ongoing.
Currently company does not have any national project on its order book.
> Expertise in undertaking all stages of project development and execution from conceptualisation to commissioning
> Established financial track record
> Undertaken diverse categories of projects with an asset light model
> Empowerment by Ministry of Railways for sanctioning project estimates and award of contracts
> Standardisation of operating procedures resulting in faster decision making
> Experienced Board and Key Managerial Personnel and skilfully trained workforce
Promoter the Ministry of Railways currently hold 100 percent of the pre-offer paid-up equity share capital of the company. After this offer, promoter will hold 87.84 percent of the post-Offer paid-up equity.
Pradeep Gaur is the Chairman & Managing Director of the company.
Other members, who are part of Board of Directors list, are Ajay Kumar (Director Personnel), Vijay Anand (Director Projects), Arun Kumar (Director Operations), Sukhmal Chand Jain (Government Nominee Director) and A P Dwivedi (Government Nominee Director).
Sabita Pradhan, Shiv Kumar Gupta, Vinayak Bhalachandra Karanjikar, Rajen Habib Khwaja, Dr L V Muralikrishna Reddy and Dr Anil Kumar are Independent Directors on the board.