Rites is trying to consolidate now: Rajeev Mehrotra

Railway consultancy firm Rites will come out with an initial public offering (IPO) on June 20 with an aim to raise Rs 467 crore at an upper band of Rs 185 per share. The proceeds through this disinvestment of 12.60% stake will go to the government of India. Rites chairman and managing director Rajeev Mehrotra, in an interview with Ateeq Shaikh, talks about the company’s revenues, projects and plans.

What is Rites share of business for various segments?

In terms of business size, roads and inland water transport are very small. If you see the revenue, last year (2017), 60% came from consulting, 24% from exports, 7% from locomotive leasing and the balance from energy management and other things. The turnover was around Rs 1,550 crore. Today, our order book is Rs 4,818 crore. Nearly 50% of order book comprises consultancy work. Of this, around Rs 2,400 crore is from Railways, rest is from metro rails, airports, highways, inspection, etc. Non-consultancy work is another half, which has Rs 680 crore of exports, Rs 1,400 crore is construction like the engineering, procurement and construction and there is some percentage from the sale of power.

Any diversification plans?

No, we are trying to consolidate now. We have already done two expansions in the last two-three years - energy management and turnkey. We need to attend to these as well as consolidate what we are doing.

What’s the growth outlook for renewable energy?

We have a mandate for 1,000 megawatt, being a deemed distribution licencee for the Railways. For Railways, installation of solar is being exploited.

Any further consultancy plans for Railway Land Development Authority?

The mandate for station development will come. We are already doing transaction advisory. When we go to Indian Railway Stations Development Corporation, maybe we will try to offer them our engineering solutions.

What is the ratio of domestic vis-a-vis international business for Rites? How much business is by nomination?

Roughly 80:20; 80 is domestic business and the rest from international markets. At times, it also happens to be 75:25. Two-thirds of the works is by way of nomination and the rest is through bidding route.

How are works pertaining to high-speed rail and semi-high speed rail progressing?

Our involvement was there during the initial studies of high-speed rail. Right now, Japanese consultants are conducting the study. Wherever they require us or opportunity is available, we are working with them. For example, recently, we did geological investigations with them. We are also doing work for high-speed corporation for shifting of utilities; work on that has begun. For semi-high speed, there is a possibility for us working on Delhi-Mumbai corridor as well as on Delhi-Howrah corridor. The government is still evaluating what is the best risk-return profile. Semi-high speed corridors are needed wherever there is congestion. Without stopping the line, work will have to be done. At the moment, no proposal has been shared with them and we have been asked to submit an offer. We are still evaluating our options. Upgradation of signalling, improvement in rail tracks, sleepers and possibly even overhead equipment will have to be changed.