State-run rail infrastructure engineering firm Ircon International files for IPO

By Ankit Doshi

  • 28 Mar 2018
State-run rail infrastructure engineering firm Ircon International files for IPO
Credit: Shah Junaid/VCCircle

Government-owned and operated railway infrastructure engineering and construction company Ircon International Ltd has filed its draft prospectus with the Securities and Exchange Board of India (SEBI) to float an initial public offering.

The government, which is acting as the promoter through the Ministry of Railways, has proposed to sell 9.90 million Ircon shares, or a 10.53% stake in the company, through the public float.

The Centre will get three years to pare its stake to 75%, or below, from the date of listing, to meet SEBI’s norms on 25% minimum public float.


The IPO size is estimated at Rs 1,000 crore, according to one person directly aware of the matter.

In May 2017, VCCircle had reported about the appointment of merchant bankers for the proposed listings of railway firms, including Ircon.

Earlier this week, state-run warship maker Garden Reach Shipbuilders and Engineers Ltd had filed its draft red herring prospectus with SEBI for a Rs 1,000-1,200crore IPO.


The share sale is part of the government’s target to raise Rs 80,000 crore ($12.5 billion) from stake sales in state-run companies in 2018-19. It seeks to boost rural and infrastructure spending as well as contain fiscal deficit ahead of the 2019 general elections.

Ircon and Garden Reach join a growing list of government-owned companies preparing for their maiden share sales. The list includes North Eastern Electric Power Corporation Ltd (NEEPCO), MSTC Ltd, Mazagon Dock Ltd, Rail Vikas Nigam Ltd and IRFC Ltd. The Union had also proposed to merge and list National Insurance Company Ltd, United India Assurance Company Ltd and Oriental India Insurance Company Ltd.

The government had recently pared its stake in aircraft maker Hindustan Aeronautics Ltd, Bharat Dynamics Ltd and alloy maker Mishra Dhatu Nigam Ltd as part of its disinvestment programme for the current fiscal year.


Here’s a snapshot of the proposed IPO by Ircon International


The government has proposed to sell 9.90 million shares out of the 93.78 million shares owned by it. State-run IRFC Ltd, Bank of India and other key individuals own the remaining 2.68 lakh shares.


The issue size is estimated at Rs 1,000 crore. The public issue will result in a 10.53% stake dilution of the government’s holding.

Use of proceeds

The company will not receive any proceeds from the offer. The money will go in the central government’s kitty.



IDBI Capital Markets & Securities, Axis Capital and SBI Capital Markets are merchant bankers managing the IPO.


Crawford Bayley & Co. and Hogan Lovells International LLP are India and international legal advisors to the company and the government on the IPO.

J. Sagar Associates is the legal counsel representing the merchant banks on the public issue.


Ircon International, which was incorporated in April 1976, is an integrated engineering and construction company, specialising in major infrastructure projects, including railways, highways, bridges among other residential, commercial and industrial infrastructure activities.

The company is headquartered in New Delhi and operates through 26 project offices and five regional offices in India, besides five overseas project offices in Sri Lanka, Bangladesh, Malaysia, South Africa and Algeria.

The company, with a total workforce of 1,175, had an order book of Rs 22,387.17 crore as on December 2017.

Its core business verticals are construction and infrastructure development. Under its construction vertical, the company has undertaken 35 railway projects in India and overseas. Railway projects contributed 71.25% to its total revenue in the nine months ended December 2017, while fiscal year 2016-17 and 2015-16 accounted for 68.26% and 77.12%, respectively.

Under the infrastructure development division, the company develops and maintains railways and roads on build, operate and transfer (BOT) basis.


The company reported net profit of Rs 187.65 crore between April and December 2017 on revenues (from operations) of Rs 2,412.94 crore.

In 2016-17, its net profit was at Rs 384.18 crore on revenues of Rs 2,948.06 crore.

Ircon’s net profit had declined at a compounded annual rate of 11.96% for the previous three fiscal years, starting 2014-15. Its revenue grew at a CAGR of 0.83% during the period under consideration.

FY19 disinvestment plan

The government aims to raise Rs 80,000 crore from stake sales in state-run companies in 2018-19.

The disinvestment goal set by finance minister Arun Jaitley in his budget speech is higher than the Rs 72,500 crore target set for the current fiscal year, but lower than the Rs 1 lakh crore the government had expected to collect.

The Centre has raised an estimated Rs 99,000 crore through disinvestments in the current financial year. However, more than one-third of that amount, or Rs 36,901 crore, came from the stake sale in state-run refiner Hindustan Petroleum Corp Ltd to state-run explorer Oil and Natural Gas Corp.

The government plans to list 14 state-run companies, including two insurers, on the stock exchanges in 2018-19. Besides, it has initiated the process of strategic disinvestment in 24 companies, including national carrier Air India.

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