New Delhi: With the government planning to divest 12.6% in Rail India Technical and Economic Services Ltd, or RITES, the public sector undertaking (PSU) of Indian Railways is set to launch its initial public offering (IPO).

In an interview, RITES chairman and managing director Rajeev Mehrotra talks about its growth prospects and how it seeks to expand its portfolio. Edited excerpts:

What are your plans for the IPO?

The IPO will hit the market on 20 June. We have 20 crore shares of 10 each, or paid-up capital of 200 crore. The company’s net worth is 2,100 crore. The centre has decided to divest 12%, besides another 0.6% for the employees. So the IPO will be for 12.6% and we are not adding any fresh capital. However, what I can tell you is that we will be starting road shows in India from 12 June in Mumbai.

How is the company’s financial growth?

Our total revenue in the last five years has increased from 1,083 lakh crore to about 1,563 lakh crore. The first nine-month revenue for FY18 was about 1,061 lakh crore. We have consistently been paying dividends of 30% as prescribed by the government and have been a good dividend payer. Our Ebitda margins have also stayed between 32% and 42%. Currently, we have an order book of 4,850 crore.

What kind of consultancy services are you providing?

We provide total solutions for transport infrastructure projects; besides, we also have a strong portfolio of quality assurance services for third-party inspections on procurements done by Indian Railways and other agencies. In metros, we are providing many solutions, including pre-feasibility to detailed project report and project management services. Having worked for the metro projects in Delhi, Bengaluru, Ahmedabad, Nagpur and Pune, we have now bagged a prestigious project in Mauritius for a 32km light metro rail project, on which work has already started. We have strong team of 3,200 employees, of whom about 2,400 are engineers and experts from different infrastructure segments.

The majority of your revenue comes from consultancy. Why are you trying to add more portfolios?

Yes, almost 60% of our business comes from consultancy services. RITES is moving into energy, which is a very promising sector. We can use this opportunity in a big way. We have already set up a joint venture with the railway ministry, the Railway Electricity Management Corporation. Under this arrangement, we are helping railways to buy power directly from generators, for which we are getting a small facilitation fee. It has helped railways, which happens to be the second-largest power consumer in the country, to save money in a big way.

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