New Delhi: The Indian Railways wants its leasing and financing arm, Indian Railway Finance Corp. Ltd, or IRFC, to launch an initial public offering, or IPO, to raise Rs1,000 crore.
“We have begun processing the papers for IRFC to launch an IPO,” said Sudha Chobe, financial commissioner with the Railway Board, which manages the railways.
“But it will be done only when we (the Railway Board) think that the market is favourable.”
The IPO would help IRFC consolidate its leasing business and also enter “new segments”, Chobe said, declining to elaborate. She added that the railways’ plans to launch an IPO for its consultancy Rites Ltd has been postponed.
A top IRFC official refused to confirm the development. The corporation has not put up any proposal for launching an IPO before the railway board, the official said, speaking on condition of anonymity.
IRFC managing director R. Kashyap was unavailable for comment as he is on medical leave, his office staff said.
IRFC, a financing subsidiary of the ministry of railways, raises money from the market to part-finance the plan outlay of the railways.
The money IRFC raises is used to buy rolling stock and meet developmental needs of the railways.
Locomotives, coaches and wagons valued at Rs39,549.11 crore have been added to the asset base of the railways with funding assistance from IRFC till March 2007 since its inception in 1986.
According to chairman of the parliamentary standing committee for railways Basudeb Acharya, who is a member of the Lok Sabha and a leader of the Communist Party of India (Marxist), it was at the instance of the finance ministry that the railway ministry has initiated this move for an IPO.
“They (the railways) should not move forward on the proposal as it would mean divesting control in IRFC. The railways are in profit and there is no need for this,” he said.