Just minutes after the Ministry of Railways withdrew its decision for IRCTC to share 50 percent of convenience fees with the government, DIPAM Secretary Tuhin Kanta Pandey said that his department’s advice to other ministries had been that in case of listed state-owned companies, they should be mindful of the interests of minority shareholders.
“Our clear advice to all the departments has always been that any policy decision with respect to listed PSUs, should be taken with the interest of minority shareholders in mind. The railways has evaluated the pros and cons and withdrawn its decision,” Pandey told Moneycontrol.
DIPAM is the Department of Investment and Public Asset Management, and comes under the Finance Ministry. Its role is to privatize PSUs or take them public through initial public offerings, and shed stake in listed PSUs through offer-for-sales. It also monitors dividends paid and share buybacks by PSUs.
DIPAM’s role is especially crucial this year as the centre looks to meet an ambitious divestment target of Rs 1.75 lakh crore. Having already successfully carried out the sale of Air India to Tata Sons, Pandey’s task for the remainder of the year is to privatize Bharat Petroleum, among others, and take LIC public.
It was Pandey, and not the Ministry of Railways, who announced the reversal. “The Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee,” he tweeted.
Shares of IRCTC fell 25 percent in the morning of October 29, but recovered to trade 5.5 percent below the previous day’s closing after the announcement of the withdrawal. On September 28, the Rail Ministry announced that IRCTC would share 50 percent of its convenience fee revenue with the government, leading to an investor backlash.
Separately, Pandey told CNBC TV-18 that the Rail Ministry had considered DIPAM’s recommendation and withdrew its decision on sharing of convenience fee
“For the listed companies there is much wider interest and the interest of minority shareholders. DIPAM’s recommendation should not be linked to its selling stake through OFS; it should be looked at as a more fundamental issue and not transactional issue,”he said.
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