MUMBAI: State-run IRCON International plans to divest road projects beginning 2019 to maintain an asset-light portfolio, with focus on engineering cash contracts, chairman Sunil Kumar Chaudhary told ET.The company, which is under the railway ministry, will hit the capital market with an initial public offer on September 17, with 9.9 million shares offered for sale by the government in the price band of 470 to 475.
The face value of shares is 10, and retail and eligible employees will get 10 discount on the issue price.
The issue closes on September 19.We have a consistent track record of making profits and paying dividends.
We are selective about the projects that we bid for; we want them to be viable and have at least 8-10% margins, said Chaudhary, who is also the companys managing director.
In 2017-18, we bagged new orders worth 6,500 crore, in 2018-19, we would like to win the same amount of orders, if not more.The companys engineering, procurement and construction order book under execution is worth 22,400 crore.
It has another 12,600-crore worth of orders in its kitty, on which work will start next year.
At present, almost 93% of its orders are in the local market, primarily for railway projects.If we are able to bag the international orders we are looking at, then topline and bottomline of the company will grow exponentially.
In 2013-14, our operating profit margin was 24-25% due to foreign projects; now its around 14-15%, so if we get the foreign orders, bottomline and topline will benefit heavily, he said.IRCON also has a portfolio of development projects, where it executes projects on a buildown-operate basis.
It has five road projects, of which two are already generating toll and one will start in December.
The company also has 26% stake in five railway joint ventures with coal mines.Next year, we plan to divest our road projects, the Dhule-Pimpalgaon highway, and subsequently liquidate other projects too.
We want to be asset-light.
Our strategy would be to build a project and run it for a year and then churn the portfolio, Chaudhary said.