A Year Later, Railways Unlikely To Meet Proposal To List Three Subsidiaries

The listing of two railway public sector units may get delayed further, a year after it was proposed in the Budget 2017-18, as the government is yet to sort out financial issues facing these companies.

While Indian Railway Finance Corporation is facing deferred tax liability issues, the Indian Railway Catering and Tourism Corporation is dealing with concerns on service charge waiver, two railway officials told BloombergQuint on the condition of anonymity.

These two railway PSU units are part of the government's ambitious divestment target of Rs 72,500 crore for the financial year 2017-18.

IRFC's depreciation is far greater than its profit, resulting in an accumulated tax liability, the official said. The deferred tax liability is at 55 percent when it should be paying a maximum tax of 34 percent, translating into a liability of Rs 6,600 crore, one of the officials quoted above said. The depressed net worth has prompted the government to postpone the public offering, he added.

The railways ministry had approached the Ministry of Corporate Affairs to look into resolving financial issues of IRFC and has received recommendations from a Institute of Chartered Accountants of India-led panel last week, the official said.

IRFC is the sole financier of railway projects by sourcing low-cost funds from the market. It was to get listed by November 2017.

The initial public offering of Indian Railway Catering and Tourism Corporation is also on hold as the state-owned company faces issues of service charge waiver, prompting the government to prepare a different business plan, another railway official said. IRCTC, that handles catering, online ticketing and tourism operations of the Indian Railways was slated to be listed by January 2018.

A third PSU, the Rail India Technical and Economic Service, will file its draft prospectus by the end of January, the second official quoted above added.