Govt collects Rs 729 crore from sale of 10 per cent stake in RITES

The Finance Ministry has collected Rs 729.44 crore (US$ 104.37 million) from divestment of 10 per cent stake, or 2.5 crore equity shares, in its railway engineering consultancy company RITES Ltd through the Offer-For-Sale (OFS) route.

According to the secretary of department of investment and public asset management (DIPAM), "Government undertook offer for sale for 10 per cent of paid-up equity in RITES on 22-25 November 2019. The base offer was fully subscribed (100.01 per cent) with disinvestment proceeds of Rs 729.44 crore (US$ 104.37 million)". 

In the last three sessions, company's share witnessed a drop of nearly 8 per cent on the government's decision to divest its stake in the company. The stock fell a slight to 0.25 per cent to Rs 282.15 (US$ 4) on the BSE on 26th November 2019.

The proposal to sell the 10 per cent stake in the company was presented on 22nd November to non-retail investors only and on 25 November to retail investors and non-retail investors, with an option to also sell up to 1.25 crore equity shares, representing 5 per cent stake, through the offer-for-sale route.

The floor price for the OFS was fixed at Rs 293.50 (US$ 4.1) per share. Discount of 5 per cent to the cut-off price was also given to retail investors.
As on 30th September, 87.4 per cent stake in RITES, the only export arm of Indian railways for providing rolling stock overseas, was owned by the government.

This transaction will help the government to reach closer to its divestment target of Rs 1.05 trillion for the current financial year, which is higher than the target of Rs 90,000 (US$ 1287) in 2018-19.

The privatisation of Bharat Petroleum Corporation Ltd (BPCL) was approved by the Cabinet last week, where the government will sell its entire 53.29 per cent stake in the company to a strategic buyer along with transferring management control. Although, the sale will not include Numaligarh Refinery Ltd in Assam and the refinery will become a separate entity to be later hived off to another public-sector firm.

The Cabinet had also declared selling of its 30.8 per cent shareholding in Container Corporation of India Ltd (Concor) to a strategic buyer along with handing over the management control. At present, the government holds 54.8 per cent in the company. Shares in Shipping Corporation of India Ltd of around 63.75 per cent will also be reduced by the government.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.