The Indian government is likely to move forward with a proposal to merge two major railway public sector undertakings, Rail Vikas Nigam Ltd and Ircon International, a senior government official confirmed today.
The ministry of railways holds 72.8 per cent in Rail Vikas Nigam and 65.17 per cent in Ircon International, with the two companies commanding a combined market capitalisation of around Rs 65,000 crore.
The railways ministry has chosen to defer the selection of a new chairman and managing director for Ircon in view of the impending merger.
Earlier, the ministry asked the Public Enterprises Selection Board to postpone the selection process for the post due to the consolidation plan.
Both companies operate in the railway infrastructure space, with RVNL focusing on domestic project implementation, whilst Ircon has a strong international presence.
The merger forms part of a broader rationalisation exercise within Indian Railways, which owns seven listed undertakings.
The government also plans to divest stakes in its listed entities to raise around ₹84,000 crore by 2029-2030 as part of targets under the second national asset monetisation pipeline.
The ministry intends to bring its stake down to 51 per cent in several entities in pursuit of the monetisation target.
Earlier this month, both companies informed stock exchanges that they had not been notified of any such proposal by the government.
However, officials speaking on condition of anonymity confirmed the railways are likely to proceed with the plan.
Financial experts estimate that reducing government stakes to the minimum qualifying threshold for government companies could raise a little over Rs 70,000 crore at current valuations.
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