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Tuesday, June 12, 2018
Consultancy will remain key business after IPO: Rajeev Mehrotra, RITES
State-run transport consultancy and engineering firm RITES will hit the capital market on June 20 with its initial public offer priced at ₹180-185 a share. Elara Capital (India), IDBI Capital Markets, IDFC Bank and SBI Capital Markets are the book running lead managers to the issue. Chairman and managing director Rajeev Mehrotra told Rachita Prasad the consultancy business would continue to account for 60% of the revenue going ahead, but RITES will keep looking for new businesses to enter to leverage on its expertise.
Edited excerpts:
You have entered some new businesses in the past few years. What is the business profile you aim?
Consultancy business accounts for 50-60% of our revenue, mainly in the transport infrastructure sector. We have got into exports of locomotives and coaches (20-25%), leasing of locomotives for in-plant use (7-8%). We have a joint venture with the railways to handle their power procurement and also do renewable energy business. This business is also doing well. We are also doing engineering, procurement and construction work for the Railways. We will continue to look for more opportunities that can be add-on businesses to our core consultancy business. Consultancy will continue to be the main business.
What’s the revenue and order outlook?
We have an order book of ₹4,818 crore, which will be executed over the next one to two and a half years, depending on the project. Over the past three years, our order book has reached its highest level because of the increase in infrastructure projects in India and some other countries where we are active. The order pipeline remains very good. Investors will find us attractive because of the proven track record. We have positioned our self as a multi-sectoral consultant, so that even if one sector slows, we don’t get impacted.
Many private companies have set up their own in-house consultancy teams and there are many consultancy companies looking at the Indian infrastructure sector. How do you plan to maintain your position amidst competition?
Private companies have got into this business for their own use. In highways and airports, there are many companies from India and abroad looking at opportunities. In metro, there is a lot of competition with larger foreign consultants. But our company is still unique, and we have a track record of 44 years. We continue to be as profitable as we used to be, so the increased competition is not hitting our business.
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