RITES to pick 24% stake in Railway's station redevelopment entity

A view of Allahabad Railway Station, in Allahabad | Photo: PTI
The Centre’s Rs 1-trillion plan to redevelop 400 stations across the country is likely to get a boost with Railways subsidiary RITES in the final stage of taking up 24 per cent stake in the Indian Railway Stations Development Corporation (IRSDC).

According to sources, a shareholder agreement was signed on May 21 and the proposal will be taken up for approval of the shareholders of both the companies in the annual general meeting expected in August.

IRSDC, the nodal agency to redevelop stations in India, is now a joint venture company of Rail Land Development Authority (RLDA) and Ircon International.

The plan is to enhance the paid-up equity of IRSDC with RITES acquiring 24 per cent stake amounting to Rs 48 crore, while Ircon would add Rs 12 crore to it. Overall, paid-up equity of IRSDC would increase from Rs 80 crore to Rs 200 crore. RLDA has already put in additional Rs 60 crore. After this exercise, Ircon’s share in the company will reduce to 26 per cent, while RLDA will continue to be major shareholder with 50 per cent stake.

“The experience of RITES will be valuable to the board of directors as it is the prime consultancy organisation in the country, while the presence of Ircon will bring in construction experience,” said S K Lohia, managing director and chief executive officer of IRSDC.

IRSDC is at the core of Indian Railways’ mission of transforming the country’s railway stations into world-class 24x7 hubs. These redeveloped hubs will be called ‘Railopolis’, aimed to attract huge investment and business opportunities.

IRSDC was a subsidiary of Ircon International till September 2017. However, in September, the Rail Land development Authority grabbed 1 per cent stake from Ircon, which converted IRSDC into an equal joint venture. According to an ICRA report, in the medium term (1-3 years), about 50 stations are likely to be taken up for redevelopment with an estimated cost between Rs 10,000-20,000 crore, depending on the extent of commercial development around these stations.

To speed up the first phase of the redevelopment of 42 railways stations, the government had last year adopted a cluster approach by making five public sector companies in charge of each cluster. The companies included RITES, Mecon, National Project Construction Corporation (NPCC), Engineering Projects (India) (EPIL) and Bridge and Roof Company (India) (B&R).
Apart from these 42 pooled stations, IRSDC has taken up 13 stations for redevelopment. A source said two stations — Habibganj (Madhya Pradesh) and Gandhinagar (Gujarat) — may be commissioned by the end of this year.

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